Meeting that 2 in 5 of the last requirement allows a single owner to shield $250k of appreciation and a married couple to shield $500k.Unless you predict a lot of income from the MTR or you feel that there is a lot of appreciation incoming over the next three years (minus time get the property sold), you may want to consider collecting your $100k (passing GO) and redeploying that money to whatever you feel is its best use. 

OK so you paid three times what they were worth day one when you bought them..

The IRS classifies income into three categories: active, portfolio, and passive.

There is DSCR seasoning that it as little as three months if you have an LLC and you would like to use the new appraised value.

I have three properties, prob need to sell like you said. 

One caveat is that your investment will be "locked up" for three years in the fund unless you use it to buy an individual note from them.  

Do I draft the contract price for higher than the actual build price that would include our estimated profit (sell price) or would a separate agreement between the lot owner be sufficient enough that outlines the deal since we don't know the actual sell price until it goes to market?

We have an owner who, against our advice, recently installed a thermostat that only they can adjust, and from three states away. 

Provided that both markets are appreciating at the same pace I would rather own one $600,000 duplex then three $200,000 ones.

Live there for three years and move and buy again.