If you are setting aside funds for capex, taxes, insurance, or other expenses that don't occur monthly, transfer those funds to Savings each month and hold them there until it's time to spend them.

STR seems to have better tax benefits (in the right market) but is it worth it at a distance ???

If so, there are no transfer taxes due. 

Despite the equity We also want to take advantage of tax advantages we did stay in the property for 2 years !  

Focus on absentee owners and start with the ones who live the farthest away and only own one property in the area since they have the least use for the property.You can also drive for dollars, looking for anomalies of disrepair and then look them up in the tax records and use a site like Spokeo to do cheap skip tracing.

If you never sell, (you will it to your offspring) you never pay tax and they don't pay tax.

So all of the gain and depreciation recapture are initially still tax deferred.However, like Joe said, the down side is later when sold  you lose the 1031 option. the client will pay tax on all gain and depreciation recaptured from before the 1031 also. 

Since your lender requires prior experience building and selling/refinancing a single-family residence (SFR) on your own property, you may need to adjust your approach.

It’s definitely smart to evaluate the tax and cost implications of your funding options.

Now I can see some builders having an issue with comps.. but other than that its crazy to take these funds as income and then pay tax and plow it right back in..