This question is most likely best for a lawyer familiar with local regulations and code.

•There are also different important rules as well as different regulations that you need to take note as well as you need to follow if you want to obtain this 1031 exchange.

Rooming houses dwindled in numbers, and zoning regulations took out the rest.Now apartments in popular suburbs are as expensive as in center cities, and for people of even moderate means their own apartment or house may not be realistic financially.  

Bottom line these are NOT federally regulated or state regulated loans.. they who have the gold make the rules.

As Sean Wagner mentioned, the city of Chicago has adopted their own regulations on charging what's commonly referred to as a "security deposit" you need to do it another way. 

I know there are some STR regulations, but it seems there are plenty of parts of town where it can be done.

He is the best and sells nothing.Your idea makes sense, but as you've seen with regulations, it won't work in practice for a short-term rental.I like @Dan H.'

Your state probably already outlines the procedures to follow here.

- Legal and Regulatory Concerns: Are there any local laws or regulations in Fredericksburg, Virginia, that I should be aware of regarding pets in rental properties?

I am currently researching the different regulations in Ontario and GTA.