In my experience Seller pays for Section 1 damage being current infestation and you pay for Section 2 preventative maintenance.

One approach might be to rehab the property like you otherwise would, which would include repairing the exterior to cover the crawlspace appropriately, and perhaps improve the drainage near and around the foundation to prevent soil erosion/shifting.  

I have a neighbor who airbnb's two bedrooms in his home, but he also lives there, so maybe that prevents certain ppl from booking.

If I did not create a lease what is the best way to establish ground rules for the tenant so that preventable issues/questions are taken care of upfront? 

Side note:  This is done to prevent fraud so you don't pay off your buddy the appraiser to give you a higher home value and you get to deduct more from your tax return.  

If it does qualify, does a 1031 exchange prevent me from putting the entire proceeds from selling my duplex due to it being used for personal use at some point?

Does getting a Real Estate License prevent wholesaling?

Any formal agreements you do, make sure the written language covers things like: preventing a  partner from leveraging their equity (and the property) on another property purchase outside the partnership, lawsuit protocol (i.e. if a partner becomes party to a lawsuit separate from property incident it triggers an immediate buyout or dissolution).  

My understanding is that new builds is strictly regulated if not prevented currently in LA.

They agree to things that a strong agent would prevent - like a house I have under contract for a seller (another BP'er), where I got the buyer to eliminate the home inspection contingency.