Also, if you have advice for someone like me who is looking to increase their deal flow and eventually gain financial independence/early retirement, send it my way.

How long should you hold on to a property before selling from a financial aspect?

Repeat this process and you could surely house hack your way to financial freedom!

We would suggest working with a local community bank that can understand your overall financial picture, and structure a line of credit based upon your available equity and your ability to re-pay.

Financially it would be better to remain renting your primary residence and concentrate on purchasing investment properties.Better yet buy a multi unit and live in one unit while upgrading it to increase rents and cash flow..

Should my LLC partner with him as an individual? 

In order to evaluate what is best for you financially you would need to have projections on what the potential business could earn vs what you could earn strictly renting it out. 

The insurance companies are allowed to raise rates by zip code not on an individual policy for “an act of God” claim.

It is certainly possible to combine a primary residence exclusion and a 1031 exchange to completely eliminate most and defer the rest of the tax.However in your case with only 1.5 years of depreciation it might make more sense financially to simply forgo the 1031 portion and pay the depreciation recapture.  

The scale of your development (large scale apartment complex or individual singe family housing) will determine the method that you would use to locate any utilities.