Second homes cannot be utilized for DSCR loans because they can't produce income to qualify.

If you are audited and the IRS looks at your 1031 and there is only your word against your actions, you're going to lose the audit.I totally get you wanting to avoid those nasty ordinary income taxes. 

However, looking to leverage real estate to generate income and or future wealth.

Side question, assuming that you have a pretty strong income from work, would you hold your commercial real estate as long as you can and to by another on top of the existing one or would you 1031 to a bigger commercial real estate instead?

Sure, what you do will affect those latter two, but nothing about the realtor.Perhaps with in your setup the lawyer and accountant may need to confer, but the accountant will prepare the return according to whatever income/expenses you provide and whatever legal structure your lawyer puts together for you. 

Hint: if there's only one box for the rental income then enter the combined rent from the purchase price.

I don't think a new investor can do that.You are right that STR is not passive.

Financial Management: Set up a system to track your rental property income and expenses.

Additionally Dayton has a pretty strong rental market, making it a good place for real estate investors to generate rental income.

It is income driven so you may not qualify.  2.