No additional protection, no tax savings. 

Increase earnings, reduce expenses, save up, and invest.

Operationally, it's easier in multifamily and you'll have cost-saving opportunities as well when it comes to certain expenses.

@Corbett Brasington I'm a realtor and feel if your already doing all of that you should consider having an attorney or title co do the paper work and save yourself the commission or get your license and put your commission towards the sale.

Opt 1) utilizing our savings in the brokerage account and emergency fund and pay for it all up front. 

What would you save in captial gains on the $360k if you sold now?

You will learn a lot on your own home that will save you time and money on investment property.

STRs also avoid automatic classification as passive if rented for seven days or fewer per tenant.To maximize tax benefits, maintain detailed logs of all hours worked on activities like tenant communication, cleaning, maintenance, and marketing.

We plan to stay in this house for more than 5 years unless another great opportunity arises, but maybe it is best to allocate a bigger portion of savings to our real estate investment savings account than our home improvement savings account for the first few years.

It is a tough market and there's nothing wrong with taking a breather and waiting for things to stabilize while focusing on savings and education.