The easiest way to do that would be for your tax payer and their taxpayer to complete the 1031 as tenants in common on the new MF property.  

Would love to get some schooling from you more experienced Pro's out there on the best completely legal and ethical way to structure this.

The first flips were during a super hot market, so 1 was an easy rehab and the other I purchased at a discount for cash simply resold 45 days later for profit.

If the cracking is simply along grout lines and there are no raised edges, you could probably cover it with the vinyl (it will be hard underfoot).  

your statement was correct pre 08 but not post 08.In many ways with many HML getting a loan will require the exact same qualifications as getting a loan from a bank.. tax returns credit income and experince.. the place for the HML is simply banks DO NOT do rehab loans.. so this has allowed the HML to firm up the requirements.

The seller was renting it out previously and the renters completely destroyed the home.

If you negotiate a good enough deal that pays you then complete the transaction with the investor to buy the house you have under contract.

As far as paperwork goes, a simply promissory note should do the trick, especially with friends and family.

Here's a simple example:Price: $50kRenovation: $30kHolding costs: $5kRenovation complete!

I am completely new to Real Estate but have wanted to begin this journey for a long time.