I think that's a great approach I have a lot of clients who self manage have no issues at all.  

Since you’re considering converting the upper unit into a short-term rental, you may also want to implement strict rules around smoking or strong odors in your house rules to avoid future issues.

Are you aware of some actual legal authority that validates the IRS opinion on this issue?

Is there any issues with doing this on investment properties that people have had in the past? 

Yes the lack of identical apples-to-apples comps has been an issue in the area for years.

The only issue appears to be the missing breakers and it being turned off by the bank.

However, I have heard and read of many horror stories of landlords working with incompetent property managers who provide no real value.In attempt to avoid this issue, I am doing my due diligence and asking investors for referrals of trustworthy property manager.

One downside of MF can be the age, and insurance can be a big issue.

The brother was fed up and needed to sell, but there was a significant issue.

I will not know that until I climb under the house and into the attic etc... for inspectionThe area is close to things and is not in a indicated crime location and has a very nice open lot area on the corner with it but again assuming the tenants stay and lease I am looking at that as a smaller issue..Thanks for bringing up the concerns but I have tried to do my due diligence but do not really know is the analyzing aspect has missed something major.