It might also benefit you to read up on you local laws regarding section 8.

Hey Ashley,Section 8 provides a subsidy to low-income tenants to help cover their rent, with the amount varying based on factors like local housing costs and tenant income.

There are other ways to help locals live without getting rid of all STRs.

As Dave points out, only real estate held for business or investment use qualifies for 1031.  

Part of me wants to cash out and purchase in another state which has more appreciation potential as I believe my local market has peaked. 

I'm just a guy finally posting on BP after years of reading while I built my business but I just wanted to offer your a different angle to look at the problem and say, "how much would it be to buy the shell house and roof it?"

It's a great business!

Clear separation helps demonstrate that rental properties are business activities.Bookkeeping Accuracy: It’s easier to reconcile and categorize expenses when they’re all in one place, reducing the chance of missing deductible expenses.Professionalism: Separate accounts show a more professional approach to managing rental properties, which can be beneficial if you seek financing or partnerships.2.

I would start local before looking outside.

All real estate is local!