Next, the lawyer will have to do a publication in some local newspapers 30 days (don’t quote me on the time).

Because the property was once investment, and was the product of a 1031 exchange you will have to have owned it for 5 years before selling if you want to get the primary residence exclusion. 

Yes I am thinking we should be able to apply the 121 exclusion as you mentioned.

Find one agent who meets your criteria, and then work with him or her exclusively in that market. 

Your math not correct and you are not factoring in the deductions(such as the standard deduction for you).Very simply: If you gift half of the balance to your fiancee (which you can do with the annual exclusion and the lifetime exclusion), with 20k W-2 and let's say 28.5k cap gain ( 32k sale proceeds less 3.5k basis), your cap gain is around $750.

I've already set up a Google page, facebook page, newspaper ad, and am working hard to clean up the image and get the units rented.

It sounds like you can have it in your wheel house but no need to exclusively rule out HML or Conventional. 

@Jeff MckayIf you have a $100k of profit (or capital gains), I’d personally take that tax free under sec121 exclusion (ie sell).But, I don’t know the rest of your numbers or your market.

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@Simon Obas Run your business exclusively as a business and you'll have much more resources to be charitable.