So you have to make sure that enough is allocated to the land/building portion to cover your 1031. 

However, it seems you could scale back your repair allocation, but at the same time, I am guessing your wanting to build a reserve. 

That said I agree that certain needs have to be addressed and that's some in my firm we have allocated for. 

And a step further, it can be a step closer to obtaining open lines of credit for allocations, I have seen many $1m open lines that were achieved this way. 

You'll need to provide transaction details... property location, purchase price, allocation of transfer and recordation taxes and settlement charges, etc.

I am comfortable with paying progressively higher fees to a sponsor that out performs which is the example that @Enrique Huerta has highlighted.Also, the LP typically own’s all of the equity and the promote is an allocation of cashflow or returns so not technically an allocation of equity in the deal.

I'd like to build up a cash reserve through this first property so I can re-allocate the cash flow to additional properties in the future.The reason I'm looking into PS is because I live in LA and it's a relatively close proximity, with seemingly good short-term rental demand throughout the year (although mostly during winter and spring months).I'm wondering if anyone has any experience in this market? 

The analysis is fine you just allocate your expenses differently.

The bills (including groceries) will all be paid instantly when my check is direct deposited, my savings will be automatically withdrawn from my paychecks so I never even see it, and what's left over is mine allocate as I see fit.

So it is eligible for a 1031 exchange.At the closing you will be taking an amount of cash equal to the amount of proceeds allocated to the primary residence sale (1/3rd and you'll be 1031ing the proceeds allocated to the investment (2/3rds).