I am considering a 12 unit multifamily property in my home market of Harrisburg, PA. 

I have a friend/neighbor that wants to sell me his house below market value so he can move back into an apartment and travel.

Then they will start the process over.As for finding a market. 

I don't know if shifting to MTR could generate greater interest but it doesn't solve the marketability issue and all you are doing is punting the root issue down the road. 

Sit back and wait for the market conditions to flip to where those strategies would work for me, or adapt to the current market.  

But it's playing with fire to buy there if STR is a priority as it's very likely they will eventually start enforcing it better.Yes I've seen this same thing in some of the markets we operate in.

Are the tenants paying market rents?

Even when the market is down, gradually adjust rents so tenants don’t experience a huge price shock later.

For multifamily, target markets with strong rental demand, value-add opportunities, and creative financing options like seller financing or private capital.

Quote from @Bud Meacham: The market is very competative in California.