What i do know is i will convert $300k to roth at an estimated 23% fed this year.  

That should fix that issue and just keep on them to get them to stop eventually. 

This means your tenants' private-sector jobs will eventually end.

I think that is the right way to start until I grow, and eventually buy a property and then figure out an exit strategy.

We converted a old restaurant on the property to a coworking lounge, redid the pool and built out the roof to a entertainment center with fire pits, lounges, bubble chairs, barbeque, large screen TV, music, yoga mats and amazing views of the ocean and city lights.It is designed for coworking/coliving for business professionals and entrepreneurs who want to...Live where they work.

I was intending to rent out the upstairs 3/2 as an LTR then convert the basement to a unit for myself half the year and rent it out as an MTR (midterm rental) when I wasn't there.

You will eventually have an issue but if you do a good job it will be few and far between.

I would keep the property and eventually refi to help get your payment down lower.

And once you convert it into your primary residence it is no longer eligible for a 1031 exchange. 

The losses just pass into future years that will eventually offset future gains.