But, if you are younger than 59 1/2, you could get whacked with $50k in tax penalties alone. 

You certainly can 1031 exchange from CA to Hawaii, although the California Franchise Tax Board will make it a little more annoying by forcing you file a new form (Form 3840) each year after you sell...failure to file the form will result in taxes owed. 

Happy to help you get started with house hacking and other investing tips.

A direct attempt at seller financing will result in taxes being recognized for the value of the carryback note (making the exchange less efficient).

Great tips. 

Basically in a year where I have a 400-500K loss in stock value, I could sell the stocks to realize the loss, sell one rental house and pay no capital gains tax on its 400-500K profit.But you might be thinking, you still lost 400-500K in the stock market.

You will need to figure out what your monthly payment will be for the property (mortgage, insurance, taxes).

My payment is $1000 with around $300 to tax and insurance.

BC has a transfer tax and is very tenant friendly with caps on rent increases (during rent renewals, not when new tenants move in). 

Could a long term lease could be written as a series of short term leases (less than 30 days), and thus qualify income from the rental as "Active" and thus allow the tax filer to file as a "real estate professional"?