By adopting the house-hacking method—living in one unit while renting out the others—we plan for the tenants to cover the mortgage and gain valuable property management experience.

Quote from @Dennis Knapp: I Have one double that I live in i bought as an investment just to help pay my mortgage.

I suppose I could combine the two ideas and live in a basement while renting out a 2 bedroom home to a traveling agency. 

I'm sure they also told you their systems will protect against aggressive attorneys and creditors and make you invisible so nobody will ever dare file a claim against you...it's all a money grab.If you are a sole proprietor I am putting my money on the fact a single member LLC in the state in which you live/own real estate will suffice.

After living in the property for a full year, we have come to terms and accepted that this is not our ideal location.

I used to live in Katy and still flip in Houston, but recently move to Florida. 

If your tenant starts a kitchen fire and the insurance provider finds out it was a rental, they will deny your claim.Landlord insurance still covers the property, but won't cover your personal belongings since you live elsewhere.

If you want to run a charity for your relative, then you could just help them with the mortgage, or buy the house from them for a great rate and let them live there cheaply.

I will be living in one unit and renting the other unit out.

If you are living there, then you need to weigh the benefits of having a home, as oppose to renting somewhere else.