@Emali Taylor SS has had some awesome returns and is a great niche, but it straddles that line between being a RE investment and being a business that has a large RE component. 

We refer to this as a split use property and you would qualify for both the Section 121 Exclusion ($250,000) as long as you can say that you have owned and lived in the property as your primary residence for at least 2 out of the last 5 years and a 1031 Exchange as long as you have rented it long enough to document intent to rent (probably 1 year - or more - straddling two income tax years - or more).Generally, your tax advisor will allocate the sale price, taxable gain, etc., between your primary residence usage and your rental property usage on a prorata basis using square footage.

We refer to this as a split use property and you would qualify for both the Section 121 Exclusion ($250,000) as long as you can say that you have owned and lived in the property as your primary residence for at least 2 out of the last 5 years and a 1031 Exchange as long as you have rented it long enough to document intent to rent (probably 1 year - or more - straddling two income tax years - or more).  

I would lean more toward straddling three tax returns if you decide you want to move into the property. 

I think at a minimum you would want to hold for at least one year, which would straddle two (2) tax years, but the longer the better. 

I know some people try to skirt the law by holding properties longer than 12 months, or straddling two different calendar years, but I'm almost positive it's going to be personal income taxes and you are not elgibile for a 1031 exchange.

In this case, they they want to gift you a portion or all of one property they might want to hold/straddle for at least three income tax returns to help demonstrate their intent.  

Assuming your biggest concern is federal taxation, and not state, you'd probably be better served by engaging an Enrolled Agent, particularly since your investment activity will be straddling at least two states (CA and TN).An EA can help you decide what entity structure best serves your investment goals, and can usually recommend great accounting software and bookkeeping resources.While I'm not an EA myself, I work closely with a great one that serves one of my overseas clients.

Regarding the stock market- While we like the returns in our portfolio we always hedge our bets and only purchase in round lots; then use a straddle strategy to sell covered puts and calls to day traders.

I think you need to factor in prop management fees, otherwise you will be straddled to managing this property forever!