If you're selling that $500k rental but identify 15 replacements worth a total of $3 mil, you gotta find that extra $2.35 mil somewhere to keep the 1031 valid.Most people stick to the 3-prop rule, some use the 200% rule, but you have to be verrry careful with that 95% exception because, unless you have tons of value to play with or have a bunch of extra cash you're willing to throw into the deal, you could be on the hook for a very big sum.

I would imagine that the interest rate that you obtained from a hard money lender would be fairly high.

There might be  a play for scraping the building and doing something new if location is good.

Your family member could also provide the financing on it and make money every month with a positive cash flow spread between the debt and the rent collected or be like a guarantee person that is the main backer for the long term loan your Bank or other lender that  owns that property with a long term loan with that property  on a security  loan until that loan is paid off.Not saying the fix up budget makes this decision fairly difficult but i would say to not have a house that needs over $5,000 on the "make ready" expense to make a 20% gross return giving a cost price and sales price you gave on your example.What you could do to find a deal is pretty limitless. 

The old adage "Buy Low, Sell High" is in play here. 

To keep the conversations flowing smoothly and fresh in my mind, I practice my dialogue with sellers when I’m in the car alone, at my house, have my girlfriend role play as one etc.

A percentage of estimated construction cost is fairly standard.

To play Devil's Advocate, I heard similar headlines about Phoenix in '05 and '06. 

It’s fairly common for me to be asked what I’m willing to pay over the the phone.

This would be a buy-and-hold play for us.