You don’t want to use modulus for this, since the row count is different for each group. Instead, reset your counter, and set a variable for the number of rows that will change every time you change groups:

<div class="row">
    <?php
    $i = 0;
    $row_count = 3;
    while ( have_posts() ) : the_post(); $i++; ?>
    <div class="item"></div>

    <?php if( $i === $row_count ): ?>
</div><!-- .row -->
<div class="row">
    <?php $i = 0; $row_count = $row_count == 3 ? 2 : 3;  ?>
    <?php endif; ?>
    <?php endwhile; ?>
</div>

I endorsed restarting the counter variable every time a new group is created and setting the new row limit to 5 minus the current row limit. This will alternate between 2 and 3 mathematically.

To avoid writing div tags when there are no posts to print, only start printing row tags inside the loop and only print a conditional row ending tag if the loop has done at least one iteration.

Code: Demo

$i = null;
$breakOn = 3;
$rowStart = '<div class="row">' . "n";
$rowEnd = '</div>' . "n";
$item = '    <div class="item"></div>' . "n";
while (have_posts()) {
    the_post();
    if ($i === $breakOn) {
        echo $rowEnd . $rowStart;
        $breakOn = 5 - $breakOn;
        $i = 0;
    } elseif (!$i) {
        echo $rowStart;
    }
    echo $item;
    ++$i;
}
if ($i !== null) {
    echo $rowEnd;
}

Output:

<div class="row">
    <div class="item"></div>
    <div class="item"></div>
    <div class="item"></div>
</div>
<div class="row">
    <div class="item"></div>
    <div class="item"></div>
</div>
<div class="row">
    <div class="item"></div>
    <div class="item"></div>
    <div class="item"></div>
</div>
<div class="row">
    <div class="item"></div>
    <div class="item"></div>
</div>