There are some short-term rental insurance providers that allow you to pay for coverage by the booking so this could be an option.Having said this, it seems like the list of things that can go wrong far outweigh the list of things that can go right.

The pros far outweigh the cons. 

Me personally, the risk of disrupting that by trying to make them pay for it outweighs the gain.

Finding a property management company that you can trust with your investment can be a weight off of your shoulders and provide "mailbox" money to you without you having to lift a finger (except for when you have to grab that money from the mailbox).The cost of property management services varies, but any great trustworthy property management company can outweigh the cost substantially by providing you with time-saving services that handle the day-to-day operations of owning a rental investment property.

If you value resource conservation like I do, this pro outweighs the management difficulties. 

I think without any hands on experience the risk of investing out of state just far outweighs the benefit.. remember has has been stated you'd be competing from a distance with expert local investors which would be tough to do. 

So it doesn't meet the 1% rule, and expenses would outweigh any rental income from the home.Given this, what is a sensible first step? 

It is a long hold period but that should be outweighed by the tax benefits and potential appreciation that come along with a QOZ fund. 

I think it would really depend on how tight the timeline is, whether they are planning on doing a 1031 exchange if they were to roll into another investment, whether the tax savings on the 1031 outweigh the loss they may take rushing to sell within the timeline, and the location and condition of said duplexes.  

For me, the pros outweighed the cons though.