., The issue you need to resolve to determine whether you can do 1031 on the construction is to first determine what your intent in buying/constructing the new home.  

Did you run into any other unforeseen issues that you learned from?  

If you don't ask, unless it is a major issue (e.g. cracked foundation), they may not make you aware of it.As well, many (dare I say most) agents are 'driven' by the Seller.

Build in late 1970s, 3 bed/2 bath, 2 car garage, approximately 1600 sqft, need new carpet, possibly new roof, has some foundation issue, and require general update through the property as stated on the flyer.

I personally like dark hardwood, but they present maintenance issues... dust and dirt, pet hair, scratching, etc.

You can usually fix these issues and these will provide an immediate boost to the property's value.Also, I would say chances are good you can find some motivated sellers in these areas.

Loan amount should not be the issue more what the appraised value is.

As you go down the scale of desirability, the price goes down, until you reach the small station, in a bad location, hard to get to, in a low income neighborhood, with environmental compliance issues.  

The carrying cost is less 500 a month so that's not an issue. 

In CA safety has become a huge issue in many ciites.