I figure my options are to sell and take a loss (not ideal), or preferably find coverage that allows or doesn't care about the K&T.

If a cash out refinance, many lenders will allow the cash out to satisfy the reserves requirement.DSCR lenders generally let you vest either individually or as an LLC.

Your accountant might have a preference.2.

The only thing is WY LLC will flow through the income and losses to our individual CA return. any insight on this matter is greatly appreciated as I’ve heard and saw conflicting things regarding LLC needs to be registered in CAthank you ! 

We negotiated the price down a bit from $350k to $340k and the construction company is committed to pay 2% of seller's paid costs as incentives if I use their preferred lender.

Beyond that, carrying - whether concealed or open - is mostly an exercise in machismo, since the vast majority of individuals that carry are men.

I would prefer not to keep all my eggs in one basket.

The real loser in the deal was the individual who gave his home way.

So whether you sell to their trust or to them individually it still has to pass from you in order to do the 1031.But even more you don't want to be in ownership when they pass so you can get the step up in basis and inherit the property tax free.

There are other sites and also insurance housing companies that focus on longer furnished stays (for instance, furnished finder), but having done both MTR and STR I much prefer STR.