Keep in mind this is a self-directed account and most are not.  

My guess solely looking at your numbers is that it's an older/distressed property which means you have to account for more costs in capex. 2nd thought being it's not in the best of neighborhood then you'd have to take into consideration lower quality tenants/ neighbors and maybe increase expected vacancy and late payments.

A higher CTR tells Airbnb’s algorithm your listing is engaging, which improves your ranking, increases visibility, and leads to more bookings.With the rise of professional photography, simply having high-quality photos isn’t enough anymore.

This may be expensive and not worth it but having it legally split, may also increase value. 

But just like a lot of things, what is increasing here, could be decreasing in a few cities over.

I rent my portfolio out as LTR and self-manage.Good Investing...

Your not correct under many different circumstances.First property tax is 1.1% (fairly safe) with 2% annual increase (prop 13).Next expenses include a lot more than property tax and interest. 

.- Hold for a bit and 1031 into something else but am fairly confident there is not much appreciation to come on this property.

I'd find this out.This would be a deal breaker if the city doesn't at leave put in writing that you can legally put in a bigger Septic tank to accommodate the bedrooms that have been added.Also was the increase in house size done legally since they weren't required to upsize the septic tank?

If you choose to set it up in Illinois (IL) and then file as a foreign entity in MI, you will end up paying two state filing fees, which unnecessarily increases your costs.