It needed a new kitchen and both baths needed replaced, paint and carpet.

One of the things I made a mistake on was buying replacement windows instead of new construction windows.

If you have 20 rentals and roofs last 20 years in your area, you'll be replacing a roof every year, for example.In your case I'd consider "adequate reserves" to be about $40,000.

The seller was going to replace it.

But it was a historic home with an antique front door and antique pine hardwoods, neither of which could be adequately replaced with the insurance money.On the positive side (if you can call it that) he was able to begin the eviction process on the remaining tenants immediately.

What would happen if the furnance needed to be replaced?

With the rent vs PITI you have, you Will have negative cash flow once you factor in maintenance, repairs, major replacements, vacancies, etc.

The items need to be repaired/replaced to bring this to a C4 or better condition before we can close on it.

Not all states' tax code recognize that a 1031 exchange exists, so in those states you will pay tax on the gains to the state tax collector.Best to calculate your expected tax obligations both ways to see how much you actually benefit; don't forget to add in fees paid to the QI for the scenario where you assume doing the exchange.The other thing to consider is how long will it take you to find suitable replacement(s).

You don't want to look at a rehab project like this:Bought it for 30, fixed the kitchen which adds 10 in value, put in granite counter-tops which ads another 5, replaced the flooring which cost me 10, fixed the roof which cost me 10, replaced the windows which cost 5 but adds 10 in value, so the ARV will be the sum of all of this.