It's basically a legal 2-unit that can cashflow $900/month.

Or really they were ALL pre foreclosures when it was legal to do this in OR and WA laws changed in 08.

Or for the high-end primary homeowner has no legal way to 1031 exchange; so the deferred sales trust is a no brainer.

A lot of the US market - housing, stock, treasuries, etc - is basically a legal money-laundering location for honest or ill-gotten gains in the rest of the world, because the markets are open to foreigners and as close to a guaranteed safe haven as can be found.

Well anyone can write anything into a contract, but whether it is legal and enforceable is for the courts to decide...It is State law here that a contractor must call 811 or they are liable for the costs.

What happens during periods when the demand for legal work is lower?

Also you can find lenders that are a lender (have their own guidelines and terms) who can also broker to make sure you're getting the best of both worlds. 

All existing STRs with 2 days rented in the last year will be granted legal non-conforming status.  

@Zach HowardThere is no legal requirement for landlords to actually witness lease violations firsthand.

As long as we would be legally allowed to proceed with this plan, then the question remains, as you point out, what is the tax burden for the partial 1031 exchange.