My grandfather, along with his twin brother, were home builders who transitioned into building and managing a significant multi-family portfolio, which remains family managed to this day.With my personal family background, as an agent I have largely engaged in the multifamily space working with legacy owners in the sale of their properties - from 6 unit, single building properties to 19+ unit, multi-building properties.

I have found that multifamily properties tend to cash flow better than the single family homes. 

@Eric SmithGenerally, if the taxpayer sells the relinquished property to an unrelated party, the taxpayer generally cannot acquire replacement property from a related party unless:The related party is also participating in a 1031 exchange.The related party pays more in tax on the sale to the taxpayer than the taxpayer is deferring in the exchange (this scenario is rare).Let’s look who is considered a related party: Spouse, children, grandchildren, parents, and siblings.Corporations and shareholders owning more than 50%.Commonly controlled corporations.Partnerships and partners with more than 50% interest.Trustees, grantors, and trust beneficiaries.Non-Related Parties:In-laws.Aunts, uncles, nephews, nieces.Friends.Domestic partners.Entities owned 50% or less by the taxpayer or a related party.In your case, your mother-in-law, aunts, and cousins are not considered related parties to you under the definitions in Sections 267(b) and 1031(f).

If it has always been your primary, and you sell right away - full exclusion (up to the limit of $250k single or $500k couple)2.

@John Barton correct, on a single family home no lender is going to give you rental income to hep qualify.  

Also, the state of formation is likely where internal disputes would be brought among LLC members, so if you and a partner and/or spouse live in CA, you probably want to arbitrate in CA if the two of you had a disagreement.

Recently one of my clients purchased a $120k single family house and is currently renting it out for $1550/mo.

I focus on rural, single family and duplexes.

Quote from @KT Fissore: we vacancy in one of our single family long term house in leander. 

Rentals, on the other hand, give you steady income with 5-6% returns, backed by strong demand (54% renter households) and affordable rents averaging $1,783 for single-family homes.