However, you may be able to sell your % to the other investors as one sale and go forward with a 1031... if the corporate structure can handle it appropriately, if you can say/demonstrate that your intent when you went into the deal was to hold the property for productive use and now that the groups direction has changed you are selling your portion to purchase other property to be held for investment.And if the improvements to the property would not cross the threshhold of "creating inventory" and could be classified as ensuring best and highest use.  

I would be very cautious about hiring contractors that don't have verified licenses, proper insurance coverage, bonds, and are in good standing with the state and all insurance / bonding companies.

If you have a properly priced property you should be able to find tenants in 30 days or less.It is time for a price reduction.

Since you have the liberty to decide on the layout, consider the best placement for the appliances first and what they need for proper ducting, power, water and gas (if applicable).

If there are water issues that's potentially a big expense to fix--possibly you'll need to rip up the entire basement apartment and start again for it to be properly drained. 

I'm just figuring the best way to do it, maybe I do get another agent to list it... but I'd like to ensure that I'm the one purchasing it, which sounds like it will still be tough since it'll be on the open market at that point. 

I want to ensure I am doing this transaction the correct way but I also don't want to spend extra money if it isn't necessary.

I don't believe the average Title III or small time investor can afford to properly diversify with automated underwriting. 

If you buy right and do a proper analysis then you can mitigate your risks significantly.

You need to be prepared for that scenario if only to ensure you don't get stuck in a corner if you wanted to buy and hold.