@Eilon ShohamSTR and MTR can be profitable with the right business plan. 

It's the cost of doing business.

Your advice will be invaluable in helping me navigate these initial steps and lay a solid foundation for my future in real estate investing.Thank you so much for taking the time to read my post and for any guidance you can provide!

I'd agree....but his guests will fell creeped out and hurt his business.

Something to consider while you build your "business"

As you probably know, water in the basement will start to produce mold in about 24 hours, so your first order of business is to get the basement dry ASAP. 

Even if you create a non-CA LLC, if you are managing the business from California, you will likely be deemed to be "doing business" in California and therefore likely subject to CA taxes.

If a STR has a typical homeowner's policy and just Aircover, and the property burns or a tree falls on the home, it will not be covered at all because it was operating as a business under a homeowner's policy.  

I would bet that most title companies who get into the 1031 business don't know how to advise on or conduct much more than the simplest of exchanges. 

Real estate is a long game and there can be a lot of curve balls so if you have those four things you're best equipped to navigate the journey.