My Fiance and I are very familiar with the arbitrage model, however the main benefit of the course would be to scale faster than we could alone. 

That said, there are huge benefits if you commit to it and get creative.

The 181 day rule applies to tax benefits of a 2nd home. 

One of the benefits of this is that you don't have to spend so much money all at once.

I screened Tenant B per usual, although they have the least rental history of anyone I've rented to and are getting a bit of the benefit of the doubt based on Tenant A having been good (plus they have a guarantor, the mother of both tenants).Tenant A is moving out half a month before their year-long lease ends.

I.e. what if one doesn't get along with the other-Any benefits to trying to officially convert it to a duplex with the city if it is zoned to allow MF?

I already own an LLC (residential contractor) and understand the liability benefits of running this deal through the LLC.I'm only asking about the differences from a business perspective (taxes, showing the income as business income vs. individual income, etc.).

Given your situation, seller financing at 7% might be the better choice since it provides some cash flow, even though you lose out on tax benefits.

The real savings and benefits come when you're purchasing an existing LLC or corporation that already holds the property, rather than forming a new entity and buying the property directly.

You may not find huge tax benefits by putting your properties into a corporation - Though there are risk benefits.2.