., investing $130K capital), how much am I benefitting from the current $45K of equity.

If you are originating the CFPB rules are the same for a land contract or mortgage, so I don't see any benefit to creating a land contract.

@Franck Armand, I'm not sure who informed you, but those respective markets are all well past the gentrification phase.

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?

Focus on areas with low vacancy rates, strong rental appreciation and economic growth (check to see if businesses are coming or leaving and what unemployment looks like). during this phase you should decide what tenant profile you are going to target section 8 (or similar)?

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.

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.