I thought by dividing the property and putting ownership in separate LLCs it would limit my exposures and liability.   

The annual rent increase is limited to 3.5% a year, however this year, we've spent about 35k in new siding for the building, a new floor for her apartment, a new fan, new stove and hood. 

If it's because of the tenants, you now have limited visibility on it and difficulty with tenants.

Is there time limits to convert, I understand that there may be depreciation recapture, but if I keep that as a primary residence say for 20 years or longer am I going to have problems with IRS. or at some point way down the road there will be depreciation recapture or does that go away after awhile.

Lenders will require 5% down and you will need to meet the conforming loan limits (not high balance unfortunately).

The low price tag is so tempting, but they just don't appreciate like SFHs, HOA and assessments are frustrating, and loan options are limited depending on the building's owner occupant vs renter population. 

When using this type of financing, you can buy as many properties as you can afford without any mortgage limitations. 

Once you put a second loan on a property, it's leverage is high and it's leveraged against another property so the scale is limited.

These areas might provide higher returns due to lower initial property costs combined with tax savings.Rent Control Laws: Be mindful of local rent control or tenant protection laws, which could limit your ability to adjust rental rates or manage your property effectively.7.

All cleaners must go on checkout day and I allow limited exceptions in peak season and weather / emergencies etc.