If you had sold it a year ago, you could have taken the homestead deduction and paid zero capital gains on the increase in value.  

If you have a lot of capital already, a solid income coming in elsewhere from real estate, and want to minimize your headaches / downtime to get a property, than I would say this strategy fits. 

Coming up short on 20% capital.

What capital do you have and what are your goals?

A traditional IRA pays taxes when you withdraw month at your normal income tax rate which is generally higher than the normal capital gains rate.

Unfortunately, I don't have the working capital to procure the land and finance the entitlements process.

My focus is on properties that are slightly positive in cash flow, while also offering capital appreciation potential, and ideally being self-sustaining in the long run.During a recent visit to LA, I didn’t quite feel confident about the current state of things there.

If you are focused on getting multiple assets at once, consider this:1. you really don't have enough available capital to do this safely right now and you will buy cash flow properties with cap ex which you will need reserves for2. you need $15-20k in reserves for each property you buy so factor that in3. when you try to buy multiple properties to start, you end up missing the mark on your first one because you are collecting and not curating your portfolio

All 16 units would have to remain on same lot/deed forever (so in terms of value, I can’t capitalize on the duplexes being sold to conventional non commercial buyer) think financially it would be nice to phase it out one duplex at a time.

Go to meet ups in the area, find out all active investors in that market, talk to brokers in the market who have clients looking for capital, attend events that you can network, and look into joining the various communities in real estateGino