It is further complicated by repair vs depreciation.  

Financing is the 1st thing to pay attention to. 2, 3 & 4 unit properties will still be eligible for 30 year residential loans. 5+ will require commercial financing which has less attractive terms and is typically more complicated, especially on smaller commercial deals like you're speaking of.

I found several posts that get into a more strict and complicated investment and that does not apply here.Any help is appreciated?

 Mark, thank you for your offer, yes, I'm going to need your help, as soon as I can find professional advice in regards to the financing process; I think my situation is a little more complicated, I'm still evaluating the situation myself, since my visits to local banks were not helpful.

-Can entity structuring mitigate some complications or negative effects above? 

LLCs are easy, but slightly more complicated to do and to keep up. 

I think your trying to make this way more complicated than it needs to be.

Evict (if it’s a non paying tenant)Don’t over complicate things.

@David Montore if your sister doesn't want to deal with any more 'scummy' tenants, why would she want the deeper, longer-lasting potential complications of a lease w option, or a seller wrap, or contract for deed (land contract)? 

@Eric Jacobs this is great advice, we looked at other markets a couple of years ago and shied away because of the complications- and now we feel like we're kicking ourselves for not going for it- but it does bring a lot of challenges.