They treat the assets as securities rather than real estate, and that’s an important distinction.  

Wood Frame Versus Block MythAfter doing this for 20 years, I have learned that there's no distinction to the tenet.

I distinctly recall a buyer that I worked with that purchased a vacation rental approved 3BR townhouse and it didn't get any bookings for the first 3-4 months. 

@Joel Wilmoth  agreed.. our little turn key review site were folks can leave comments and reviews gets about 2,000 hits and distinct uses a month.. and many on that site have never heard of BP..

Or perhaps obtain distinct financing for each project, like a renovation loan for the maintenance tasks, an owner-occupied loan for the ADU, and an investment or primary home loan for my daughter's property?

That said, the exemption when located within a ½ mile of a public transit space is a critical distinction that opens up your opportunities. 

There's no distinction between the two that I can find.

You are right, I have intermixed the two distinct differences between REPS and STR loophole and apologies for confusion.

Do you have a recommendation on where I can find small multifamily properties that have distinct units? 

Customization possibilities are restricted, and it may not be as distinctive as a custom-built home.