If things were easy everyone would be doing it.You need much more reserves for commercial as your first check takes longer maybe 6 months or more versus residential in a couple of months.

So your out of state cap expense versus rent is significantly worse than So Cal REI. 

Commercial is a different animal versus residential.

What information do I need to gather from the agent / seller, and what additional due diligence do I need to do when evaluating this property versus when we evaluate SFR & Duplex?

I think it would be wise that you both are definite on the strategy versus picking one to satisfy your partner.

They have paid a large amount on the home, and would rather sell it quickly versus losing all their equity.  

I've ran the amortization data comparing the cost differential of buying now at a low interest rate versus paying a higher rate in the future with a lower home price.

I thought I would present this situation to the BP community and ask their advice and opinion on the whole concept of paying off debt versus using Real Estate as a vehicle to help you reach your goals.

Try a credit union or local bank, they are much more willing today, versus 3 or 4 years ago.  

In the case of a downswing, I would certainly think that one might look to move in to a buy and hold rental strategy, versus selling to owner occupants.