Considering this, how would you be able to handle the potential objection of the bottom unit tenant complaining about AC/heating since it's likely that the main unit tenant will have access to the thermostat?

. - a home can pass an inspection but once someone is living in it and putting daily stress on the house (turning faucets on, light switches, turning on heat/AC etc), things can start to malfunction.

Mainly you're responsible for the sewer bill and to provide heat and hot water, but not things like air conditioning.If this was winter, I'd be concerned about pipes freezing if the relationship isn't going well, but a 10 year tenant probably won't let that happen.I don't really know about the downsides of not having a lease. 

@Collin H.I should go back to several of my posts from probably a year ago, where I was commenting on this and received a lot of heat from people telling me how I am wrong, I do not understand the market, and the market is going to continue to skyrocket.

The renovation is significant (flooring, counters, heating, upgrading the bathrooms, etc.), but not a complete remodel (not adding or expanding structures).

Much of lower Manhattan went for almost 2 weeks without electricity, heat etc.

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OOS investing has been a huge headache for me, to be honest.One thing is that a property may pass an inspection but once the tenant is living there and and putting daily stress on the house,  turning on faucets and light switches, turning on heat/AC etc, thing will start to break/malfunction.

Heat, and Hot water is included in the rent. 

Base things like heat on the relative sizes of the units and water on the number of people living there.