But you should certainly get the approval from HOA, and verify that city/county that the addition you're interested in would be allowed.

In either case, you should verify that you are eligible to transfer the funds from your existing retirement account (e.g. if the funds are in your current employer 401k, you will likely not be able to transfer until you quit your job). 

I don't know how'd I'd independently verify that number without seeing all their tenant records.

It seems like a truly unsecured note would have been fine. but the lender might have felt seller could still somehow had claim on the property and were not sure of how to verify implications of the note and did not want to mess with it. 

If Deal A and Deal B are identical except for Deal A being sponsored by a less experienced sponsor, which would you prefer as a passive investor?

Most banks require you to show ID  to verify you are the owner to withdraw money from an account.

Non-super conforming mortgages remain unaffected.You can verify this with section 4501.10 of the Freddie Mac "Single-Family Seller/Servicer Guide", updated just a few weeks ago: Feb 6th 2019. 

I feel my realtor and or the sellers realtor should have verified this prior to the sale.

These legal forms just basically involve the owner and the tenant verifying what is stated on the lease is what is actually happening and that the tenants are current on their rent- Once you take ownership and introduce yourself make sure you let the tenants know your preferred method of contact. 

@Regev Israel keep in mind that duplexes usually are located around other duplexes, and even if you convert to a SFR, it may not hold the same ARV as an identical home with only other SFRs in the area/street.