The bedroom/bathroom walls all seem fine, but the "living area" is separated by an awkward couple walls(see video) that I would want to remove and if it make sense add a support beam and open up the kitchen and living area completely.

The part of the lower unit "falling apart at the seams" wasn't obvious to me as I thought the whole experience of viewing a property with the tenants present was awkward so I didn't look as closely as I had liked.My thoughts are;We're interested in building equity by putting work into the property.I would plan on finding new tenants as the ones there have an obviously established history of not caring for the property well at all. 

imagine how unpleasant and awkward it will be living right next to people you had to approve, all of whom now know you to be "The Man."

It will never feel like their home and it can be awkward quickly.

It can be an awkward conversation to start with family sometimes, but remember they came to you.

It may be awkward and go poorly at first, but you'll get the hang of it.  

@Theresa Harris, I see what you are saying but considering we haven't done it yet and they have lived there for over a year I think would be awkward. 

And as @Wayne Brooks said it puts you into an awkward position of who do you lie to. 

This whole thing is further complicated/awkward in that they moved just a few houses down the street from me and are chummy with a lot of our neighbors.

I feel a little awkward sending out mailers when I have zero properties in my portfolio.Thoughts?