I currently target pre-foreclosures that either have equity or have a debt equal to the loan amount plus the arrearages.  

He drafted what equals a quit claim deed for me from the estate.

When I sell the property, they cut me a check equal to my profit on the deal.

If you decide to proceed with a 1031 Exchange, the total purchase price of the acquired properties must be equal to or greater than 1/2 of the net sale price of the duplex and you must reinvest 1/2 of the proceeds. 

A couple of ideas you might consider,  If they want to minimize taxes but are concerned with risk, offer to escrow cash equal to some number of payments, with the money being pledged to cover payments if you are delinquent.  

If they're equally good, then the fact that the other unit is sitting tells me they're asking too much.

Here are a few random thoughts:(1) As @Arlen Chou suggested, explore ways to increase income... and perhaps equally importantly explore ways to increase experience/education/judgement.

I would pay them all the same and treat them as equally as possible because people talk.

Around here the term RE investor equals slum lord.

In a perfect world you could say those two properties are EQUAL, not better or worse or riskier.