Taxes, costs, eviction complexity, etc are going to be a much bigger factor in your success than anything else.

Michigan offers tax credits and breaks for development projects, especially in designated areas like Opportunity Zones.

I do not want to stretch into California due to the Landlord laws and taxes. 

Do the tax benefits make it a good deal?

The absolute best way to avoid taxes is not earn income.  

These are leased to businesses (like chain stores) that cover taxes, insurance, and maintenance, making them much more hands-off than residential rentals.Real Estate Syndications / REITs – You can invest passively in commercial real estate (apartment complexes, self-storage, industrial, etc.) through syndications or real estate investment trusts (REITs) without being a landlord.Hard Money Lending / Private Lending – With $500K in equity, you could act as a private lender, funding real estate investors who flip homes or develop properties.

In non-community property states a husband/wife LLC is supposed to be treated as a partnership  And transferring from a revocable trust (reported on your 1031) to a partnership LLC (that files it's own tax return) is changing the tax payer. 

Just a heads up this will not be tax free, it will be a pro-rated exclusion.

Though I am unsure how I would amortize the up front remodeling costs for P&L, tax accounting.2) Interest only loans term loans -  Would allow current owner to have cash flow on the property, without eroding the asset value. 

The information shared is based on my experience and industry knowledge and should not be considered legal, tax, or financial advice.