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I supply nice properties and respond quickly to any problems, in exchange for on time rent payments and keeping the property clean.

So I’d have to do the 1031 exchange, and I’m deeply concerned I won’t find any identifiable deals within 45 days.

Is this fully legal to exchange work for a reduced rent amount?

She could, however, use a 1031 exchange to leapfrog into investment properties with better cash flow.

The exchange rate risk could be huge. 

A "transaction" occurs when: Goods, services, or property are sold;Property is rented;Cash is exchanged for other cash;A contribution is made to a trust or escrow account;A loan is made or repaid; orCash is converted to a negotiable instrument, such as a check or a bond. 

I collected a security deposit and the tenant paid me 100% of the rent upfront in exchange for a 10% discount for his stay. 

Harder to raise rents even in nicely rehabbed units. 1031 Exchanged into a property in Arizona which I now do STR with.

A reverse exchange where the QI takes title to the land before you do.