It is the difference between the adjusted cost basis and net sale.Sec 121 allows you to sell your primary residence with up to 250K (500K if married) tax free if you've lived in it for two out of the previous 5 year period.Sec 1031 allows you to defer tax into the next investment property but you are correct there are some specific requirements.An installment sale will not reduce the tax but it will spread it out over the life of the note.  

You can then lease it out to tenants and you make money between the spread.  

There is a 103K spread between what's owed and ARV.

CMBS spreads are pretty crazy right now and not many people are going that route.

Also, spreading out your investment over 5 homes won't hurt as bad when you have a vacant unit compared to only have one very expensive home with a vacant unit.  

Many people that want to buy them are buying for less than 10 K, so that limits your spread. 

My wife could possibly work for another company whilst I run our business so that is always an option. 

My guess without knowing any details - they would settle for 30-50% of what's owed, with payments spread over a few months.

If there's a big spread between as-is and punched up, you might come in and pay for the repairs and recover those costs plus a profit at closing.  

If you can create a spread and find a good deal, selling or unloading should be no problem.