Then, if you can trend over time you'll want to see where the "path of progress" is going/moving and attempt to buy in that path of progress to gain some appreciation in the future.

This defers capital gains and depreciation recapture taxes on the sale of your fourplex.After converting it into your primary residence, you may qualify for the primary residence capital gains exclusion ($250K single/$500K married), but only for appreciation after the conversion; gains from the rental period remain taxable.

Which size of home is typically perform best on a cost benefit analysis?

These tend to have less management headache but still have strong returns and tax benefits. 

Selling at FMV avoids the gift tax but provides your child with a higher tax basis, reducing their future capital gains liability.A better strategy for selling below FMV is to sell the house at FMV on an installment note, then forgive interest and principal annually up to the gift tax exclusion amount.

I think you will gain a lot there. 

I do like the tax benefits and leverage.

They will get you the plaster price and take a portion of what they gained you.

What would the capital gains be on the sale of each lot? 

I would recommend an STR for the best tax benefits and cash flow no doubt.