At the end of the day this is a financial decision so if your reasoning not to invest out of state is a financial one then don't do it.

I was also told it was a business decision not a regulatory restriction.

Since you own a single-family, your first decision will be what to do with that when you do decide to buy another property? 

You should really analyze your options, as data should make your decision easier:)How much have you been making on the STR?

see these threads.https://www.biggerpockets.com/forums/963/topics/1195280-expe...https://www.biggerpockets.com/forums/48/topics/1137397-balti...https://www.biggerpockets.com/forums/48/topics/1160450-run-i...https://www.biggerpockets.com/forums/48/topics/1159104-overl...

Need to try though.For the future, to not repeat your mistake, read this post:https://www.biggerpockets.com/forums/51/topics/1167632-expla...

There have been some great posts about this very topic.Here are a couple of helpful articles: https://www.biggerpockets.com/forums/12/topics/1171104-the-m...https://www.biggerpockets.com/forums/48/topics/1159104-overl…House hacking is the best way to get started in my opinion. 

This is another example of why it’s so important to have a good team of experts around you to offer options and discuss the consequences before making any decisions.  

I wrote a long post about the basics of depreciation if you want to understand it better:https://www.biggerpockets.com/forums/51/topics/1121063-expla...2.

Finally, your hunch is correct: when the syndication cycle closes, your past "free lunches" will have to be paid for, aka recapture.Here're some relevant posts from your favorite site:https://www.biggerpockets.com/forums/51/topics/839015-are-sy...https://www.biggerpockets.com/forums/51-tax-legal-issues-con...https://www.biggerpockets.com/blog/real-estate-professional-...