They pay very little property tax as the home was purchased a long time ago and isn't subject to the normal rates.The question is, is there a way for them to keep their current house, pay off / refinance the existing mortgage or get another heloc in a way that would eliminate the need for the windstorm insurance, rent the house out, and get cash out to buy (mortgage) another property?

@Andy Tavarez yes, you have to claim the income and you will pay tax (a lot of tax)....

@KC Pake, The 1031 exchange will allow you to indefinitely defer the tax as long as you own the property, or sell and do another 1031 exchange. 

It seemed straight forward enough that I took care of Schedule E myself since 2004 using Turbo Tax.

@Paul Strauss Thanks Paul, so that would be 20k plus tax as an estimate that is a fine starting point for evaluating quotes.

Also, by typing in the address or BRT Number into the following website I can determine the property tax as according to the City of Philadelphia > http://www.phila.gov/revenue/realestatetax/3) Management FeeMy understanding is the typical management company charges roughly 10% of rental income to manage the property.Way to add value: Build relationships with property management companies throughout the Greater Philadelphia area, making sure to screen the various companies responsiveness, professionalism, tenant screening process, tenant satisfaction (other key aspects to focus on is appreciated)4) Rental Referral FeeMy understanding is a rental referral agent receives 1 months rent as commission.Is this true even with a property management company in place?

It would be a minimum of a $60k return (pre-tax) as a flip.

., You can actually do the 1031 exchange to defer tax as @Oliver Beirne suggests whether you want to trade or if you want to sell your SoFLo property and use the proceeds to purchase the house.  

As an owner of a single member of an LLC, you can't pay yourself a salary, but you can tax a draw this would not be taxed (note above, income of the LLC is taxed to you) to avoid double taxation.

I definitely wouldn’t hurt to get some comps in your area to have an idea of what you could sell for. especially since you’d be avoiding capital gains tax.