It may also help keep the litigation target off your back.As always, check with your competent legal counsel--not all attorneys speak fluent "trust function and formation".

The caveat is to make sure the passive investment you choose aligns with your goals and it’s a good investment. 

Even though the property is really cash flowing really nicely, I am unable to cash out of the deal so for the next one, I am definitely choosing a BRRR.

1031 exchange sounds good in theory, but you need to do it in an area and at a time where there is inventory to choose from because once you identify the three properties, you have to close on one of them which is very difficult in a competitive environment.

There are good people who, if they could, would choose to live in Class B neighborhoods, but they can only afford class C....that is your target resident.  

Quote from @Connor Kline: I have interest in a multi family property that is made up of loft studio apartments, all roughly 550 sqft.

Usually, your realtor will have a few to choose from, and you should look up their online reviews.

What you should expect is what area you choose to buy in, having to deal with the issues that come with that class of property.

The tenant actually just moved in and per the lease they're responsible for washer and dryer, but their installer couldn't install the washer due to the non-functioning drain pan. 

I would look into multi family or doing BRRR's.