If someone is looking to build capital fast, they would need to find easier methods to have a 60-120 day exit and a 25-35% ROI. 

Prioritize the lender that communicates well and actually answers your questions correctly and in a timely manner.

Are the two stairs of the same height, the basement may have been designed in a normal method which would mean not totally waterproof.

I am trying to decide between doing the BRRRR method while living in one half and renting out the other or building a duplex from the ground up.

How can I go about doing this either with a 1031 or what is the best method to attack this? 

I believe Airbnb has a system in place for handling disputes between guests and hosts, and they may offer compensation for damages or issues caused by a guest.I would start by documenting everything: A detailed written description of the incident and timeline, records of all your communications with the guests, before/after photos of the damage done to the furniture and the bedsheet, a statement from the neighbors about the trespassing incident, etc.Then I'd approach Airbnb looking for guidance.

Any tips for fostering open communication and avoiding conflicts over time?

The other items you should request manually and review yourself. do you include all these requirements in the rental ad for transparency or do you communicate them verbally?

If this method of paying for help around my homes isn't legally sound in CA, I will have to change my ways. 

I would work with an investor-friendly agent who focuses on cold-outreach methods like cold-calling, cold-texting, etc to bring you off-market deals.