Unless apartments are just not as marketable, then a multifamily building is likely the most efficient for construction expense, operating expense, and rent/SF.With a building of only 12 units, I doubt you'll see any time-based advantage by phasing in duplexes.

I am trying to figure out the fairest way to go out about this so we can have it written in the operating agreement.

Welcome Sasank, my name is Thomas and I operate out of the Phoenix area, would be happy to answer any questions you have about Arizona RE. 

Hey, MadheshwaranFellow short term rental owner/operator here. 

Further, if planned well, you can have lots of operating expense deduction.

Keep in mind, that is NET income, so with enough operating expenses, and depreciation, you might wipe out any income, and thus no UBIT, you will just need to run your numbers.

They’re a large PM company, operating in about half of the U.S. states, but lately, the local turnover has become a real problem.

I operate above board so their threats aren't concerning to me.

I have watched some Youtubes and most operators say 3-4 bedrooms and 2 baths are ideal.

If you are a large enough operation where you have employees then it makes sense.