There's some complicated ways around it and things may have improved, but I can tell you that I was personally threatened with being charged with a felony in 2019 for renting my property even though I had gone through the proper permitting.

My thoughts: East Bay:- Close to a BART station to traveling medical worker/corporate person could hop on a bus/BART to work: El Cerrito, San Leandro, Hayward, Fremont, Walnut Creek, Pleasant Hill, Concord, Dublin, Pleasanton- Maybe Richmond, Antioch and Pittsburg but some parts have a lot of crime. - Going further out Brentwood and Oakley have appreciated quite a bit and have pretty good schools- Something with potential to add value: ADU attached to the main house or separately in the backyard in the future to get additional rent.

I use a broker, they do the leg work and since their interest is in my success, as opposed to an insurance sales person who's only interest is making commissions.

Your personal assets are protected with a viel, which can be pierced under certain circumstances.

(And best case it was a rental for 17 years then a primary for 3, making only 15% possibly eligible.)Personally, if you and he are both 100% sure of the facts I would first reach out to a qualified intermediary (a person who handles 1031’s).

This type of loan is based on the property's income, not your personal finances, which makes it perfect for investors like us.

The rationale being you are reducing your personal housing costs as the rented unit will be covering some of the costs. 

However, it is mostly geared toward a person who has a W-2 job themselves, which is not the case for me, so there are some applications that I am finding confusing. 

Personally, I'd do it.

Make sure that they know the area and build a relationship with them.