Feel free to shoot me a PM and i'd be happy to connect further to share experiences or insights!

I speak this from experience and would love to save you all the $ I have wasted in the past!

Does anyone have first hand experience of this? 

So the "story" of why you are buying a SFR rental but also renting yourself should be very clear in a Letter of Explanation.However, these cases can be looked at generally - do you have other investment experience - or is this first foray into real estate completely? 

Your commission split will be higher in favor of the broker, BUT it's a good place to experiment and have your training wheels before branching off onto other brokerages that give you a better split. 

Or will I go through with it and get some money and some experience which I can use later on in another deal?

Just wondering if anyone who have dealt the similar situation and have any recommendations on local engineer firms and contractors who have experience in this kinda project.Thanks ahead!!!

The best documentation in the world won't help you strategically plan how to use your 1031 opportunity if the QI isn't responsive to in a timely manner.Demonstrated experience and nationwide footprint I would toss out as the two most important criteria. 

If you have photos proving the carpet was in good shape when you left, I would absolutely push back and have no problem going to court.

If you haven't put the best possible,  experienced people around you, I might suggest getting involved with your local real estate investment groups...many of these people will have experience and contacts that could help walk you through the steps required to make this project safe and profitable or to show you why it might be something to walk away from.