Personally, I advocate for a long-term investment strategy and would recommend investing the funds, provided you are comfortable with the expected return on investment over time.

I'm looking to lessen the load of work and concentrate on my exit strategy sometime within the next 10 years if not sooner.

Which means I'm evaluating the possible exit strategies for a long-term hold. 

We are not real estate professionals.1) How would you handle the classification of the property in the 2023 tax year and would you utilize a STR depreciation strategy?

We all need a solid strategy and we need to follow it, no exception.

If not rented at fair market rent, this property will just count as your residence, not a rental for tax purposes.Structuring the property under an LLC or land trust could trigger a due-on-sale clause, so check with the lender before proceeding.To minimize risk, consult a CPA for tax strategy, weigh financing costs, and draft a legal rental agreement.

I'm a 2x house hacker here in LA (a case study in the BP book The House Hacking Strategy) and an out of state investor.

The best strategy I seem to have deployed so far was to contact all my current tenants and let them know I’d give them a cash referral fee of $250 for anyone they recommend to me that goes through the vetting process and successfully moves in.

Also because they focus on one strategy. 

We've utilized the VA loan for our current home, and this strategy has worked well so far.