If so, what are some general rules of thumb on how much they lend and what does that depend on?

I am not able to take equity out of my condo because it is currently on the blacklist due to HOA fixing the roofing and a Fannie Mae rule stating, if more then 50% of the condos in that community are owned by investors, I may not be able to refi.

No rule on earth will ensure you are 100% booked with no gaps.

You can also employ the periodic equal distributions rule to access your retirement funds prior to retirement age without penalties (but again, there are limitations, and you must make a commitment). 

Now, I'm considering whether it makes sense to create a LLC and "sell" the SFH to the LLC to take advantage of Section 121's capital gains exclusion, as we still meet the 2 out of 5-year rule, and to potentially increase depreciation value.Has anyone gone through a similar situation or have advice on the best approach?

In Columbus, you can still find the 1% rule and there's amazing appreciation potential due to how much population growth, job growth, and companies moving/developing there (recently Anduril just announced another 4,000 jobs coming to Columbus Ohio on top of Intel, Google, Amazon, FB, Nationwide, Ohio State University, etc.).

Both essentially meet the 1% rule which on is in the better neighborhood with better schools etc? 

Buy a new property, rent it out for a year and then move in for 19 years as your primary. it’s 95% tax free (19/20ths) it doesn’t matter you passed the 2 of 5 years rule  2) if there’s any rental activity before the 5 year look back period, it’s pro-rated.

Based on your description, it sounds like you would violate the self-dealing rule and could put your SDIRA at risk. 

It could also be that although many municipalities do have laws that restrict STR's, they rarely have the time, resources and manpower to actually enforce those rules.