1031 Exchange Question

[Jordan Mummau]

BP community, need some guidance.

As I've continued on my re investing journey, I've been placing more and more properties in LLC's. However, I do have a few of my initial rental properties held personally. My wife and I are looking into a 2nd home or Vacation Property that we also plan on renting short term, 7 day rentals. This 2nd home, will be out of state (FL Keys). I want to sell one of the properties being held in my personal name and exchange that money into a "2nd home". That's the general idea....

I have several questions surrounding this. Including, can I structure the mortgage on the 2nd home as a second home or does it have to be mortgaged as an investment property in order for the exchange to apply. There are vastly different financing terms between the two. Financing as a 2nd home is more advantageous than financing as an "investment property". 

Does the type of mortgage (2nd home vs investment) have any effect on qualifying the exchange or does the property just have to be of "like-kind".

The amount left mortgaged on my local rental property i'm considering selling is about $30K. Is there any advantage to paying off the property first, prior to selling. Does/would the structure change in anyway? 

Any input or ideas of how to structure this would be appreciated or some hindsight observations would be greatly appreciated!

* I do understand that some lenders have due on sale clauses or restrictions on renting "2nd homes".