In addition to the 1st floor of the house it had a livable area on the second floor with its own full bath, kitchen and separate entrance.

does the basement have an outside entrance?

In some cases, the tax-free treatment may cover the entire property if it is one unit with one common entrance. 

We conduct both an entrance and exit inspection of the property with the tenant prior to them moving in and after they have moved out and cleaned the apartment.

I am new to the site… I do not currently own any investment properties; however I am plotting my entrance into the market.

A week ago he got caught bringing a large moving truck into the complex, turns out that he was planning to move somewhere else and I instructed the security guard to refuse the truck's entrance, later on the day, he and his family had gone from their house without brining any item/furniture from the house and had yet to be seen for a couple of days.

One of the "units" (#3) has a separate entrance, that I AirB&B.

I just did a property with front and back entrance, separate garage and guesthouse and it took me 20 minutes.

Paint/carpet/fixtures on a house this big may exceed $15,000...entrance fees could be another $15,000...if you sell with a realtor at $263,000, commission would be about $16,000...and closing may run another $5-6,000.

If you're monitoring entrances to units to track who is coming and going and and what times without any cause it really feels like an extreme invasion of privacy to me.