However, you can likely sell all the properties in the required timeline to do the 1031k, although that will take some effort/cooperation between multiple buyers/brokers, considering the separate markets.  

I could be wrong but I thought I saw that Sacramento requires primary residence for the owner for STR.Do you live in Sacramento or nearby ?

In addition, committing ~ $200K requires some level of sophistication on the part of the investor and you are more likely to find someone to agree to your terms in smaller transaction sizes, but even that will be difficult. 

I am also looking for tax optimization as the business will require cash reserves and is a high risk business from a liability perspective.

Helps with your debt to income, better opportunities at cash flow, and typically requires less down to purchase.In regards to challenges, I usually build in an extra 10-15% to deal with things that I can't see behind the walls, including dry rot, electrical or plumbing issues, etc.

A "lake house" might be in a residential zoned area where a commercial use would be prohibited or at least require a variance (approval) to make an exception.

Real estate investing requires a good deal of research, so build your arsenal and over time you'll be an old pro. 

It may not be required, but we are generally in a better place to absorb the loss than our tenants.

Scaling up properties requires cash flow or equity, continuous education, networking, mentorship, patience, and persistence.

The 8 unit has required more time and energy because it had been poorly managed for years.