My main concern is just all of the noise that will be going on and all of the possible dangers of the kid eating/ playing with dangerous objects.

If your wife is unhappy about having to work for "the man" and grind away at an office job she hates, then let her quit her job and assist you with your real estate endeavors.Or, let her leave her job and pursue another position, maybe in an entirely different field, one that will make her happy. 

You keep grinding as well!

Should I just keep grinding and try to find something nearby? 

After a few years of the grind, living expenses continue to increase and with the economy so great, they decide to leave for cheaper pastures or look to move back for friends and family from wherever they are from.

You need to grind everyday to know your market and see that 200k property being sold for 100k.

She stated her reason for moving out is because I'm having another tenant's bathroom gutted and she feels that the noise from the construction will make her unit uninhabitable for her because she's a grad student and studies at home.I know I can legally pursue the full amount of the lease and penalties.

One easy thing is to make sure if you are meeting an important person make sure you are comfortable, that means clothing, meeting location, noise levels, etc.

My big concern was the LTR resident having to deal with STR guests coming in and out from the upstairs unit and/or noise issues. 

They may further enforce other codes such as tickets for noise/parking etc.