Now, I need to find an alternative.

As a result, investors are stuck with the option of spend far more than expected to make the property rent-ready and being "all in" at 2x what they though or facing the alternative of selling at a massive loss.

Stessa, Wave, Xero are good alternatives. 

You can still do well in Lehigh Valley, and you have some alternative options in terms of mid-term rental or short-term rentals in some of the towns in the valley.

Start reading about alternative ways of using your money once you have $100,000 saved.Stop reading about the FIRE movement.

Comparing to Clearwater Beach, Largo and Seminole FL are usually better alternatives as investments.

Since  the alternative is to recognize the gain and pay off the tax back to the first 1031. 

These costs sound high for a first buy and hold property, and using am umbrella insurance seems to be a good alternative at a fraction of the cost.

Alternatively, you can each set up your own single member LLC (disregarded for tax purposes) and buy the property 50/50. 

Calculate the expected future IRR of this property and compare it to your alternatives.