I'd just notify the tenant in writing what that means and what the consequences are. 

I traded up for a 7 unit apartment building.

Sure, they may be able to grow to a very moderate size,  add a few units, or trade up to a larger investment, but as for real scalability: NO.Why?  

To defer all of your gain, you'll want to trade up in value, replace all the debt (meaning new properties have at least $350,700 of debt), and not take any cash from the exchange (this is boot which = taxable gain).As for replacement property, it just has to be real property - meaning it can be commercial, STR, land, etc!

Technically it would be best to get a C Corporate or S Corp. to flip properties and since you are considered a dealer if you do several properties a year and this could have negative tax consequences in an LLC.

The operator may trade off the longer term benefits to keep a high quality tenant in place.

He hires and manages the trades and all the labor.

We have trades we use on jobs and know what they will charge which is often considerably less than what Joe Homeowner would pay for the same job . . . the trades know we will be using them again and again. 

To answer your last question, my realtor has contractor contacts I should be able to leverage for rehab budget estimates, as well as family friends with experience in the construction trades.

But, to normalize, the 10-year will eventually trade at a 100-150 bps spread to the FFR.