this is only a good idea if you have reason to believe that the area will be appreciating quickly, which is called speculation and akin to gambling not investing. me personally, I would rather put my money on black than bank on market appreciation. negative cash flow rentals are a time suck and money suck.

@Johnny Lynum thanks for recognizing that.

So in reality you are ALWAYS gambling in the stock market, yes, even with those big names that seem inconceivable to every drop and ESPECIALLY with those because most are so shocked and in disbelief when it occurs that it's only realized after your left with pennies on the dollar because you waited out a recovery that was never coming. 3rd: MATH and leverage.     

If you consistently analyze properties, recognizing a good deal will be much easier when it shows up.

Anything else is luck and relying on luck is gambling. 

Also, for those whose BUSINESS (as opposed to just investment) is STR, they can scale successfully while their experience and knowledge of the industry may allow them the opportunity to uncover and recognize those few opportunities that will provide a much higher than market risk adjusted ROI. 

From a tax perspective, I am assuming you would like recognize $0 of the gain on your property in this potential 1031 exchange. 

They gambled, and lost.

I think that 1031 investors are savvy investors who recognize that it's not very realistic to think that you should be able to sell your property for top dollar and buy your replacement property from the bargain bin.  

If you consistently analyze properties, recognizing a good deal will be much easier when it shows up.