Background: In-laws purchased a 3-bed, 2-bath vacation property used as a family cabin/STR in Central Oregon during the 90's.
The current property is in a desirable vacation market and has opportunity for forced appreciation through bathroom/kitchen upgrades. With some updated interior design/amenities and improved management it would see in increase in average nightly rate/occupancy.

They've discussed selling this property in 5-7 years which would allow them to buy another property in Idaho closer to family/grandchildren. The new property would allow them to have a place to stay while visiting and can be used as an STR when they are not in town. 

We are newer to investing and still learning the intricacies of structuring a seller financed deal. We understand the 1031 exchange option would be a good bet for them, however, we are wondering if there is another option out there. A seller financing deal would allow us to gain entry into a new market with more favorable terms and if structured correctly, would hopefully allow them to get the capital they desire to accomplish their goal of finding a new property closer to family. 

From our understanding, seller financed deals will have an agreed upon down payment, monthly payment, and balloon payment after a designated time. We are confident with some initial investment upfront the house would see an increase in value and exceed it's current STR revenue (all of these numbers to be verified). With more favorable terms, we would aggressively pay off the principal until the balloon payment is due, so when we do refinance to a new monthly P&I payment, it would still produce positive cash flow.

Hoping to tap into the BP community to see if anyone has had experience structuring a deal similar to this? What would some of the potential tax implications be and/or could a 1031 exchange still be used in this type of situation? Looking for advice on creating a situation that works for both parties involved. Thanks in advance!