I do have an interested buyer lined up as a backup option if I wanted to sell the house to them.My question is regarding the rules around qualifying for the capital gains exclusion.

We lived there pretty much exclusively for the walkable bars and restaurants.

Since you occupied it for more than 24 months and have only been renting it out since 2013, you may still be eligible for the section 121 tax exclusion on the gain.  

BUT the master would have a jack and jill bath (or if we had an exclusive master, 2 of the bedrooms would only have a bathroom across the house)2.

@Tatyana Shevnina It is not the capital gain exclusion that gets prorated, it is the capital gain itself.

@Kevin R.An IRA can apply the BRRRR model and it can be a powerful strategy to grow your IRA savings.The key principle with the IRA is keeping all transactions at arm's length and exclusively for the benefit of the IRA.The IRA purchases the property.The IRA hires vendors to do the rehab. 

@Joshua SolomonI've seen some good virtual showing software being displayed on redfin but they don't just exclusively use that.

Payments that you make normally fall into one of 3 buckets100% of the payment can be factored in somewhere on the returnPartial payment can be factored somewhere on the return0% of the payment can be factored in somewhere on the returnHouse-hacking also has considerable tax implications in the event that you want to sell this property.You can potentially defer a portion or all of the gain on the investment property with 1031 exclusion.You can potentially exclude a portion or all of the gain on the personal residence with section 121 exclusion

So I decided to focus exclusively on cash flow.

Having worked for a platform that did exclusively 506Cs and having had a lot of clients try to do 506Cs, I've found that my clients haven't been fully happy with the results unless they've been in those situations.