They would get that $500K tax free and the rest of the tax would be deferred in the 1031.A very elegant solution that puts $500K tax free in their hands now. 

In '23 the state set records for tourism revenues and visitors to the state, a hat tip to your point about year-round demand. 

If you live there 2 years or more before selling you will be exempt from tax on the 1st $250k in profit which is a nice bonus. 

Some people use their IRA to fund fix and flip's and keep the profit in them tax free. 

I did not see taxes taken out for profits.

you'll probably still need something long term like software as others have suggested but this was a thought i had... you could see the actual profit or loss from a tax perspective for each property.

As a contractor I had to work for money, be at the mercy of the customer, jobs and timelines never seemed to go as planned, only to pay tax on the money I worked for.

However, in California, each LLC incurs an $800 annual franchise tax plus gross receipts fees if revenue exceeds $250,000, and property insurance may cost more.

I find that it's almost a one stop shop in that I can use it for my business checking and savings accounts, bookkeeping, for rent collection, I can issue virtual credit card, I can create all the financial reports I need to run my real estate business and prepare for tax filing and through their partners I can vet my tenants, develop state-specific leases and more.

You may be able to deduct mortgage interest and property taxes before the property is in service.