Work with a qualified intermediary and tax advisor to ensure compliance and optimize your strategy.

I am asking what you hope to achieve with this complicated setup?

My main concern is the interest rates being so high now as to whether what I'm hoping to achieve is really even possible. 

Just focusing on the passive income you want to achieve will leave you chasing cash flow which will have you buying properties in worse areas with harder tenancies that seem to cash flow better, but will have large cap ex.Any time someone asks a question about where to invest and it can be anywhere, they aren't ready to invest and are opening themselves up to every pitch in the world on an area.

The cons as i see it include loosing the 2 of 5 year cap gain exception, typically not an ideal rental because the emphasis at purchase was buying a good home for your family and not a rental with optimal return (my ex-home consistently has the lowest cash flow for equity in my RE portfolio), not disconnected enough from the property causes addition angst on damage and may result in over improvement.  

@James SillsFrom my experience working with investors, transitioning from residential to commercial real estate (CRE) is an exciting and achievable goal with the right foundation.

You can achieve gross revenues at a multiplier per location vs that sec8 volume model. 

But i was able to achieve the elusive infinite return on a majority of my RE and all of my investment RE that I purchased prior to 2020.Infinite return has the benefit that the finances are not the hindrance to scale.  

This property will require a pool to fully optimize its earning potential, and I've already factored that into my calculations.

I just want to be involved and learn more so I could achieve more eventually.