I was told the additional fee goes to the transaction coordinator who completes the paperwork once I'm in escrow. 

But I think something can be done if we get creative, but may require a complete move out and new application/lease. 

I think your reasoning is probably sound.

I purchased this property and have completely rehabbed it, and looking to pull out cash. 

While a mini storage, apartment building or some other type may sound great they all come with their own issues and stresses. 

Once I complete the 1031 process can I live in one of the units while the others are being rented or will I have to wait a while before I do that?

It sounds like you have several units, so in your case, it makes sense to maybe just replace instead of trying to fix. 

I've found that typically in those markets, you are buying a property that is likely to appreciate less over time compared to other markets, but are consistent in bringing in cash flow, which sounds like is what you are looking for.

But it does sound like they aren't taking natural wear and tear into account and are possibly going way overboard. 

I would have a rental with 10% interest if it still cash flowed and met my criteria.With that said, you sell what sounds like your personal residence and then where do you go?