We got it under agreement for a client but during the home inspection they found a $25,000 structural issue which scared the buyer.

@Bill Brandt what makes this situation tricky (or extremely easy) is that there is no lease or any other written agreement legally binding the nephew to the house.

I want to find a contract the goes over a sublet agreement and I also want to collect a security deposit from whomever I select.  

I took the time to detail exactly what each would bring to the table and we signed a written agreement (Operating Agreement for the company).

Also, @Sandra Helena Holtz Ivarsson, before you fire the PM make sure you understand your Management Agreement. 

You're expecting them to pay for something that is not part of your lease agreement.

Of course we would establish and talk through an operating agreement with an attorney etc.

Before he even signed his agreement, our manager went to his property, torn down and rebuilt the motor, repaired the circuit board and 2 leaks, and it was working that day.Lots of sunshine pumping on self-management, whilst tossing shade on PMs, that isn't quite accurate.

I have some potential private money investors and am looking for advice on how to structure the agreement? 

If I make the decision to sell this property and take those profits and buy several land contracts (homes for sale by the owner through land contract agreements) will I be able do a 1031 exchange?