If you want the income lending/lending funds would probably be a great option, but there is rarely any equity appreciation.

This means your monthly rental income should be at least 1% of the property's purchase price.

However, many of those properties are actually on ground leases, so its very rare that the shopping center owner is willing to parcel off a pad and cell it, more often than not they are retaining the dirt and the restaurant is leasing the dirt (generally $100K-$180K annually from most markets I operate in) and then the business builds the building and when they leave the LL gets to keep it and lease it to another tenant. 

Yes can definitely get 100% financing of the construction no income no doc . 50% of the land cashout to cover closing costs 

I wanted to obtain a rental to gain passive income.

It's a great sign that the tenant is *asking* you before letting his girlfriend move in so you should treat them as any other tenant application: - credit app- background check- income check etc. 

I didn't have to do an inspection when I purchased, but did an inspection recently (annual inspection I believe). 

Even though we have a history of rental income at that property and a 2yr lease in place.

If you are audited and the IRS looks at your 1031 and there is only your word against your actions, you're going to lose the audit.I totally get you wanting to avoid those nasty ordinary income taxes. 

What's with the annual inspections for a CO?