If they are looking for more upside, then I'd work with them on a deferred interest and percentage of the ownership return. 

@Derek Bunyard, All you need do to defer all tax is to purchase at least as much as your net sale and use all of the net proceeds in the purchase or purchases.

@Daniel Schwartzberg I haven't come across one with virtual options but doesn't mean they do not exist - I'll defer to others on this one. 

Still, there are a lot of people hanging on to the hope that it will save them.Now that you have decided to raid your 401k so that you can build wealth and defer income taxes indefinitely through real estate, you must tread carefully. 

And finally, while Class A properties tend to have low capex/deferred maintenance due to age, relative to Class C and D, if there are capex items that are not accounted for it can cause any class property to run into trouble sooner than properties without deferred maintenance.

I'll probably save him a minimum of $5000 on his loan, but chances are another $10,000-$15,000.If the house you want to buy has a lot of repairs needed or deferred maintenance, there is likely a lot of stuff you can't see or isn't disclosed.  

If so, why not defer to what he has to say about it? 

@Ben Cochran, The entirety of your sale has to go into the purchase of the land and building if you want to defer all tax. 

It sounds like you could sell it rather easily and then 1031 (tax deferred) the funds into another project, maybe a quad that is in the right area to short term, etc.

Well, people who are flush with cash or equity from the last 2+ years of crazy appreciation in real estate and the stock market. 4) Some investors are OK with buying low to negative cashflow for the first 12-18 months while they stabilize the property, increase rents, and fix deferred maintenance items.