My recommendation would be to choose potential markets - in several price points - that have strong rental demand and year-over-year rent increases and that also are in markets that are appreciating. 

Depending on the price point, they may already be running targeted ads in cities/metros for buyers that may be looking for a second home/vacation home.

-Depending on your gain above, you could get a partial 121 exclusion and a 1031 on the townhouse.

It really depends.

Depending on the age of the house, even if "fully renovated" it may not have any or enough insulation.

What I am saying is the tax bill for you could be wildly different depending on how long your partner has owned this property and how much depreciation they have taken.  

If you have one of the older, turn of the century mid town houses, you are probably getting somewhere around 1600-2000 depending on the condition of the home, availability of a garage, etc.It is an older home, from the 40s I believe.

I would advise finding an investor friendly realtor when you choose a market.

Colorado is pretty dependent on tourism. 

So many dependent on government.