1031 Exchange into San Francisco Vacation Rental Condo

I just helped some clients of mine sell their Sunnyvale rental duplex and enact a 1031 tax deferred exchange into their dream location - a stunning condo in San Francisco. This will be a medium term exist strategy for them. They will initially rent out the condo for at least one year and then convert the use later to either their principle residence or to a vacation rental. With the latter strategy - which they could do right away - they would be allowed 14 days of personal use per year and the rest of the time they can rent it through a vacation rental company to tourists. Many times if you achieve only 50% occupancy with the much higher daily rates charged, the investment can be a home run. I have a similar set up in Sitges, Spain and it has been a wonderful investment with very little management from me.