It's a very common mistake where an investor sold and bought properties and then when it's tax time they find out they didn't do the right process to actually qualify as a 1031 exchange.  

It's a way of hedging my bet using as little cash as possible.

Physical REI is not a paper investment; almost anyone whose invested on paper numbers I am willing to bet is showing a lot less than the reality of if it unless they took realized gains by selling(into the appreciation rate) or cashed out refi. 

Just be ready for the challenges of managing properties remotely, which may require a property manager.Tax StrategiesSince you’re selling a primary residence, a 1031 exchange won’t apply, but you can still use the capital gains exclusion.

Banks and credit unions can also offer flexibility for investors that engage in strong relationship-building strategies, offering discounts and solid loans in exchange for borrowers willing to use the institution for other purposes (savings accounts, etc.).

That kind of balance is crucial, and it sounds like you've got a solid foundation for success.Looking forward to hearing more about your journey and exchanging ideas here on BiggerPockets.

But that is the key with investing, you need to have your educated guess of future events, place your bet, and hope you are right.

In today's market, your best bet would be a house hack.

With that money we would like to do a 1031 exchange to continue growing her portfolio.

I think you will run into a related party issue rather than an LLC issue in regards to the 1031 exchange.