No issue paying cash, just curious on cost effectiveness… as storage and commercial are not my expertise.  

Having a dozen units under one roof is way more profitable and cost effective.

After you transfer the property to the LLC, give the tenant a short letter that explains the transfer of ownership and that all other terms of the lease remain in effect.

Scott's book will provide a helpful start in teaching you the categories of fixes you may encounter and their relative (but not absolute) prices in your particular market - and having the contacts necessary to put your plan into effect in a timely way.  

Also, finding good deals in a timely fashion is a challenge these days.I would think the operating agreement of the LLC would make it difficult for the GP to effect a 1031 exchange unless he effectively bought out the LPs, removing them from the entity.

Insurance company said it is effectively two homes so it will be more expensive. 

There are a lot of career paths in this industry to think about, and maybe staying in the industry, just not as an agent, would be something that would keep you engaged in real estate and give you better insight into investing.

I am working on a project to develop an effective digital application for private landlords (focusing on 10 doors or less).

Does that effect your decision?

This is effectively tying up the ENTIRE amount, not just the 12% difference between what’s allowed.