@Bob Gruenig it might help if you could clarify what you're trying to accomplish with the LLC strategy.The most simple and common way to invest in a syndication is to put money as an individual.

Try to keep it simple.

A simple business decision that's up to you.

Could it be as simple as finding a good Realtor, buying in a working class neighborhood, etc, and renting it out?

The first tenet of the 1031 exchange is that you cannot DIY a 1031 exchange. 

Simple.

I am leaning towards demolishing the house and building a simple 3/2 but I have no market data in the city for new builds in recent years.

Grace Property Management is pretty decent.As for the draining of the buckets, simple solution. 

That keeps it simple for both sides of the transaction.

I'd check out Natalie Kolodij's podcast- she knows her stuff and she makes the concepts simple and interesting.