Despite pressure to completely gut the house, I am planning a "selective" demo -- pulling up all the hardwood flooring to the subfloor; demo-ing most ceilings and several interior plaster walls but not all -- and no exterior plaster walls except where fire damage took place.

Completely agree with @Kyle Eckert.  

So to complete the 1031 successfully you'll want to look at amounts and make %s work around the amounts.

I could be completely wrong about that, though, and I welcome a corrective response.

I don't want to simply say, "No, because you have a 3 year old".

@Roger Poulin I'm creating a real estate company currently and after I get all my infrastructer completed I'll be using some capital to reach out to delinquent owners in the hopes to get them out of their foreclosure issues, and hopefully also collect a portfolio of land to resell.  

Simply the cost of damages would have needed to be in the original move-out security deposit statement which is usually sent out within a few weeks,,(state guidelines vary). 

Only you know which route is best (Refinancie, HELOC, etc.) for your financial position but, if you can get funds to pay cash for this, your chances are a LOT better.Your other considerations are a completely different issue.

My brother owns a condo in the Fayetteville, NC area and recently got a letter from his tenant's lawyer stating that they have filed bankruptcy and that he could not directly communicate with the tenant until the bankruptcy was complete.  

It is complete with all of the time frames for documentation, inspections, and deposits and stuff, which is nice, but lots of boilerplate as well.