It will not happen with traditional lenders.

@Chris Purvis  even if a HML was not recorded you would still need a contract and you would use a title company and a traditional settlement.

We eventually settled on $145,000 as a purchase price and our bank (didn't know you could buy a house without a traditional mortgage) required 25% down.

One guy shovels my snow for food. 

You could go to a traditional lender and get cash out refis...probably up to 4 without any issue, as you've found out.

I think just trying to do a more traditional 1031 will be the way to go, if it works great, if not oh well.

You have to keep in mind that if your going to be holding the property then obviously whatever you can rent it for will dictate how much you can afford to pay her monthly out of that rent just as if it was a traditional mortgage.Cheers,Hopefully this will give you some creative ideas to try.  

Here are the numbers:Asking Price $495,000(they had it listed at 399 about a year and a half ago)Year Built: 1995(10) 2/1 units, 1100 sq ft townhouse style with laundry in attached shed, very poor design on laundry in unheated space)$6175 Gross monthly rent (9 units@625, 1 @ 550)$74100 Gross Annual$6272 Taxes$1900 Insurance$7410 Property Manager (figuring 10%)$950 Garbage$4968 Water/Sewer$7410 Maintenance and repairs (figuring 10%)$1200 Snow/Lawn$7410 Vacancy (figuring 10%)$37520 Total Annual Expenses$36,580 Net Operating IncomeThinking we could get it around $425,000 so 8.6% cap rateI know I need to factor in the loan/closing costs, I'm in the initial phases of finding out what that would be.

My only concern would be that I'm not quite sure you're going to get the appreciation (i.e. the equity capture you mentioned above) in townhomes.Historically, they just don't seem to appreciate anywhere near as much as traditional SFH's.

They usually work on shares, and ot's traditional in my area, the logger gets half of the sales price.Most of the loggers are also qualified to timber cruise and can usually give you a pretty good guess at what your logs will bring at the mill.It's also possible to sell the trees as they stand to the mill, and they will send their own logger out to cut them.