The village also had a lot of restrictions that made me not comfortable proceeding as a first time STR investor. 

I do find it odd that you are restricted on a primary residence.

If you have a rent property with good cashflow, odds are you are BETTER qualified for the next mortgage than if you sold the rent property.  

Unless your agent is affiliated with a small Firm or works in the same local office as the listing agent, the odds of them knowing each other and having already shared info about either party with each other are pretty slim.

Hi John,For something of this size, the seller might be willing to carry a portion, but odds are your lender wont approve of it.I would look for an equity partner if I were in your boat.

They can bring you these opportunities before anyone else, thus improving your odds of closing a deal.

If liability occurs from one property, it is restricted to the assets contained in that entity, i.e., the single property held in said entity.3.

Downside would be restrictions of use due to HOA. 

What strategies can I implement to maximize rental income from my first property, which I intended to convert into two units ( Unit 1:Main house, Unit 2: Basement sun room) but cannot due to zoning restrictions? 

I dont think I can demand more rent and the odds of someone using it are lower.