In a university town nearby, student housing is restricted to certain areas of town and prohibited in other areas of town. 

Moving forward in my  commercial leases I will now include language making the placement of thermostats the landlords decision with additional language prohibiting the relocation. 

This demographic is projected to keep increasing over time, so I would do whatever you can to hold onto this property (ie cash flow well).Furnishing 700 sqft with PB or West Elm (you and my wife would get along great, Bonnie) won't be price-prohibitive and well worth the cost.

A "lake house" might be in a residential zoned area where a commercial use would be prohibited or at least require a variance (approval) to make an exception.

But I would urge planners to consider that the Sec 263 regs they rely upon for the justification for not expensing remodeling costs is actually an exclusion section which prohibits deductions under pspecified circumstances that being that the amount was: "paid out for new buildings or for permanent improvements or betterments made to increase the value of any property or estate."

In Oceanside, New non-hosted STRs are prohibited outside of the Coastal Zone as of February 10, 2024.Most HOA's do not allow rentals less than 30 days so that is likely not an option unless you find a couple of places on the water that allow it but usually tough to find below $1M. 

@Eric Helena, There is no statutory prohibition against purchasing from a related party to complete a 1031 exchange. 

This would be a prohibited transaction since you're a disqualified party and anything you already own (your LLCs) is part of that. 

You would need to bring everything up to code currently and that's going to be cost prohibitive.

Since your condo prohibits LLC ownership, you can manage rent and expenses through the LLC while keeping the property in your name.