On another property REO, we were the first in to see it and the next days they shut down all showing due to covid, so nobody else was allowed to show. 

These just hold the assets and do nothing else.

I assume we wouldn't want to use one of our three selection properties on a property that could sell to someone else soon once the 180 days begins.What if I get a property under contract and the 180 day closing window begins, then the seller backs out?

The second reference, Publication 523, gives 2 key bits of information that I've never seen anywhere else, and certainly not on Section 121 itself. 

I would just talk to your adjuster… you aren’t going to ‘mess up your claim’ or piss anyone off by asking them about your specific question.  

someone else's money in your bank

Please let me know if you want to meet to talk about the market or anything else!!

Your traditional bank in most instances is going to take the loan and resell it on the secondary market.For House Hacking, my favorite concept is  purchasing a duplex, triplex or quadplex, you accomplish 2 things in 1 step, you get a roof over your head, and at a minimum you get someone else to help pay for your mortgage, and when its time to move out, you already have your 1st investment property under your belt.

But as time went on, rents kept going up along with everything else in life. 

You might also have to look into licensing in order to manage someone else's property and see if that comes in to play and how much that might cost.The next question, once you realize what your potential cash flow from this will be, is if the time you spend on it, worth the extra cash you will get.