I'd like to keep it as a rental when we move out but I'm not sure it will provide enough cash flow so we may benefit more from selling it. 

Holding them- not flipping -gives you the opportunity to use a 401(k) or other qualified plan as well, and get the benefits of tax free  or tax deferred  income. 

No, that's not how hard money works, that's where the traditional banks play.You are looking for a bridge loan essentially, something that will bridge your project to traditional financing.Bridge Plus from Lima One Capital as a for instanceThe spirit of the BRRRR is two loans:Take your hard money to do your rehab, they will finance a portion of your repairs as well.

That being said, the idea would be to rent out all units except for 1, essentially keeping the unit vacant (but listed as her primary residence for a year), before renting out the unit starting year 2.

This is why I love the BRRRR strategy- you get the benefits of pulling cash out of a property without selling it and without the capital gains or income taxes.

This MIP is $1,476.00 over the next year (when it falls off naturally in 8/2019) that is only benefiting my note holder. 

Another benefit of the LOC is the revolving credit, same as the credit card, which allows you to reuse the money as soon as you pay it off.There are a lot of options for you and having that much equity is certainly a leg up.

Far better for me to position assets for them to benefit from at arms length than to saddle them with their dad's passion.Bottom line I am a huge fan of the 1031 used well. 

But I hear there are benefits (tax & ...)to keeping some parts to declare it as a remodel to city/state. 

It might benefit you to engage someone that understands real estate investing to be able to take advantage of these discounts, as well as use them to double check your work until to you grow to a point where it makes sense to outsource.