On an 8 plex, there isn't much meat on the bones for the amount of work needed for Management, but when you factor in an additional 24 units, that starts to benefit the PM, so there is more room to negotiate.Initially, the cost of PM outweighs your returns. 

Are there any strategies I could use to still claim the depreciation, or any way that the transaction could be structured such that I don't lose on that tax benefit?

So if you sold your new property for exactly what you paid for it two days after buying it you would still be paying the tax that you had deferred in the 1031.So, going from CA to CA doesn't benefit you.  

If you feel that this is something that will benefit you in the long run then, why not.

Can Seller Financing Benefit the SELLER?

In most municipalities approvals have a few year shelf life and in the event new regulations or new zoning bills are passed you could lose the benefit of the in place zoning/development procedures.

I also estimate that, after accounting for a 10% vacancy, I could rent the property for about $1,800 per month.Even with that ($400) cash flow, I still feel like I’d be better off than where I am now, between the experience I’d gain, the equity I’d build, and the appreciation and tax benefits.

It’s worth weighing that against the benefits of accessing that equity for future investments.Since you’re considering DSCR loans, that could be a strong option, especially if you’re focused on rental income covering the mortgage—no personal income or DTI requirements needed not to mention the easy qualificaiton process compared to conventional.

Options are to take out a loan for the 25% and just purchase or co-sign a multifamily or just co-sign on a SFH so they can get the 5% down, no loan needed, there wouldn't be any real benefit to me and my husband as we would be assuming the debt but we would be helping our kids out.