The distinction about my contributions being un-penalized was clutch.

Maybe it isn't much of a distinction I guess... because either way I'm paying retail for an out of state rental that someone else puts a tenant in.Which is turnkey?

If the breaker has been replaced and the area around the main panel doesn't reek of burning plastic (electrical components melting  smell about as distinctive as burning hair) there is no safety issue. 

Is there a legal distinction there?

@Charlie Vollers the term "Duplex" can mean two distinctly different things.

My experience is that a big part of this industry runs on personality and being able to connect with people, and if you cannot do that you will be at a distinct disadvantage over others who can. 

This is imp distinction if you have both passive loss and income. 

I distinctly remember one advertised 3-plex where they said the annual expenses were something like $1800.

That would be correct if OP's father has made or intends to make an S election for the LLC.Since OP did not specify tax status of the SMLLC, we're left to assume no alternate election was made, and the LLC carries the default tax status: 'Disregarded Entity'.A DRE should not be issuing W-2s or 1099s to its owner as it's effectively dissolved for federal income tax purposes and there's no distinction between the owner and the LLC.

What we decided to do to comply with the city is to convert the home to a single family (removing one of the front doors), but keep the right side as a distinct space with a MIL suite with a small kitchenette and back entry.