A lot will depend on the condition of the home and its relative location to certain amenities (shopping, transportation, entertainment, etc). 

Of course, you have to eat, cover transportation costs, and keep a roof over your head as well.  

Cities determine the zone for properties based on long term strategies, tax base, transportation, density, etc. - and so changing the zoning of a property from Commercial to residential doesn't generally result in a lot of success.

And you’re basically running an unlicensed and unregulated hotel. why wouldn’t you just let the person keep living there and rent the rest of the units as short term?

The most important factors in achieving the results you expect will come down to location of the property in a market; how that property is renovated before being put in service; and finally how it is managed.Many investors pay close attention to transportation services, crime reports, school reports, etc.  

The unit seems to be in a great place... right near colleges, public transportation, and shopping.

I even got a 5 dollar bill from the US government with a request to fill out a transportation survey.

I work as a manufacturing engineer and my wife is a civil engineer working for the GA Dept. of Transportation.

It's a highly desirable area due to freeway access, public transportation access, restaurants and the expansion of the mall.

But without knowing what kind of returns are typical for your area, I don't think anyone can say which of those is the best deal.Based on my admittedly limited knowledge of the continent, I would say that your lowest risk would be the urbanized building - quite new, accessible to different types of populations, not constrained by lack of transportation, no vacancies.