Probably go flat on larger living area walls.It's always American Craftsman for us when I can get the right size.

I am considering a property listed at $800,000, which includes a 2-bedroom, 2-bathroom main house (1100 sq/ft) and a separate ADU of the same size.

Your problem with that property is neighborhood, not size--- that's right around the corner from Joy Park Homes.

As a broker you might be motivated to inflate the price of the property, after all your commission depends on the size of the transaction, and with fiduciary duty to seller you will try to get top dollar for distressed home in dire need of rehab.

I would employ a property management company that can handle this for you, like the one I work for as an agent.

I was also researching on Johnstown, PA and what are the main industries (sources of employment) there and is the population growing or steady etc.

Assuming that the units are the exact size, you taxable gain would be allocated 50/50 between the owner occupied unit and the rental unit. 

The company's legal counsel has said a guarantor is not needed, citing the company's annual revenue and an employee, effectively, being unwilling to cut a check on behalf of their employer.

However, if the applicant only has a low credit score but more than sufficient income, rental history, steady employment, etc., you may consider conditionally approving with a higher security deposit (or alternatively, use an insurance policy - "fee in lieu of deposit"), first and last month's rent.

You might also be able to employ a short term rental strategy to increase cashflow-- sporting events, conferences, homecomings, graduation, etc. always attract people to the area.Ask around and try to find people who are investing in Amherst/Northampton and connect with agents in the area to see what's working.