Eliminate debt, establish a budget, and save.

The IL property tax is a pain. 

By paying a commission and taxes, you get more money from the property by doing a Refi. 

There are rentals, fix and flippers, lenders, tax liens, note investors, STR, commercial etc.

I’ve taken care of all my debt and am pre-approved for roughly $220,000.

Malibu allows it but requires a 15% "hotel tax" on the gross revenue.I would recommend looking out of state or underwrite the property as a long term rental in the event laws change.

Weirdly, you may actually be able to get better terms and/or more LTV on the refinance if there is debt on the property as lenders have rules for max cash in hand (max proceeds you get at closing) for cash-out refinances.  

If you live in it for two years, you should be able to sell tax free up to 250k if you're single.

The 1031 exchange is what allows them to do this without having to pay tax on the gain or depreciation recapture. 

Also, I'm not sure how you're paying attention to it on the tax side, but the unit that you are living in's profit at sale is calculated differently than the other unit that you're renting out.Once you move out, that unit is officially available for rent so from that point forward, any profit gained at future sale will be calculated starting from that point and will be taxable.