I'm not knocking engineers, but they do tend towards a personality that takes great pride in figuring out complex issues by themselves.You ask how you can make him see reason.  

However, after extra digging and research of the financials of both entities, they decided to include a portion of the rental revenue from the management business' lease.This is a fairly complex issue and I would advise you to seek more in depth professional advice before making a final decision.  

If the fees are too high, reserves too low, renter ratio too high or it is too hard to rent out, I would pass even if other things look good.The other thing to look at is the DOM on the nicer condos in the complex. 

I'm also going to go look at a 4 plex as a possible buy and hold with renters already in the units and $80,000 renovation already done to the complex. 

The seller listed three properties, a 8 room ($382,000), 12 room ($565,000 and 16 room apartment ($795,000) complexes.

In this way you dictated the timing,  found the perfect new property, kept the old property listing fresh and  can get all the benefits of the 1031 exchange - deferred tax on the gain and you don't have to recapture that depreciation which would be pretty massive at this point.Reverse Exchanges are complex and relatively pricey but not even close to a fraction of the tax hit you are facing on that property.And if you purchase more than your selling price you can actually begin a new depreciation table on the difference.

Market for great deals (direct to seller / off market)If you read The Art of the Deal - Donald Trump - the first deal he does is buy a foreclosed apartment complex with NO MONEY DOWN and then gets a partner to finance the repairs.He makes $600k on that deal over three years and then what he does with the money is really interesting:1.

Cap rate is a little more complex and you can search the site for some good discussion on cap rates.  

G) Other - complex going through renovation which may make it hard to find next tenant.3) What is one issue stopping you from taking on more properties other than finances?

I don't mind a little complexity or getting my hands dirty as I've been a contractor as well.