From my view, neither property type (with the right features) suffers from the same potential downside appraisal risk as converting SFR or duplex.  

The main criteria to evaluate this is when did you complete the start-up phase and became actively engaged in business?

I mainly focus on do ing flips and flip to rent, but I also facilitate STR and MTR in the area too.

There are two main ways to utilize this exemption.

Price is often not the main or the only concern for the seller, they have other needs.

I’m currently selling my main house and wanted to house hack but the only multi family properties coming on the market are like $1.2 million for a duplex and it just doesn’t math :/ Home prices here have always seemed to be higher than most areas. 

Main reason to split the lot would be to maximize the lot for cash flowing rentals.

Construction is mainly CMU, Concrete, and Steel (at least for my projects), and there is a bottle neck of those resources as only few supply the area.

Water and sewer about 200 yards away.  1 mile to the main highway.  

Here’s my two cents:Paying off the condo might make sense if your main goal is to reduce risk and enjoy the peace of mind that comes with no mortgage.