Should I sell the properties, take the hit, and then buy a new property under a business loan or am I allowed to 1031 while changing ownership to an LLC?

For people wanting true non-recourse (usually to buy real estate in self-directed IRAs), you have to go to very specific specialty lenders.  

This means I am constantly researching different sub-markets in the D.C. area to try and find the best locations for future growth as our fund looks to buy and hold our investments as do many of my clients. 

I'd love to connect with anyone in that space or hoping to buy STRs in central FL. 

If you're looking for cash flow markets, there are plenty in the mid west.I would buy a duplex or tri flex, and house hack.

The state has consistently ranked as one of the most expensive places to rent and buy.

You CANNOT depreciate the house if it’s for personal use, ONLY if it’s a rental use.So I can still depreciate the house, write off items I buy to furnish the home, maintain the home, and any costs associated with running it as an AirBnB when I am not using it for personal use?  

Some strategies are much easier than others, and it is much safer to start with these (househacking, buy and hold single families, etc..).

Would it be possible to buy the house as a primary and then in year two claim bonus depreciation if I moved out and had it as a rent by room house?

If you could provide more information about the contract it may open up more ideas.I would agree with @Zane Cress that a tenant buy-out would be a good option, although if you are dealing with 5-6 properties (And how ever many units per property) you're looking at an extremely high cost.