Roof, water heater, front door has issues smoke alarms etc. etc. etc.

Owner financing will probably not work in this case, from what you have said they don't seem very motivated, they seem to be testing the waters to see what they can get. 

My support system would have to be incredible man.

If all their money was gifted by a relative last week, I wouldn't feel safe doing the loan, if it were me.Are you putting the borrower on a draw system, or are you giving them 100% of the loan up front? 

I've moved into one side and am loving the area but I need to rent the other side soon to actually start having the building (slowly) pay for itself.The duplex has almost fully separated utilities except water.

one thing we had to deal with though in our area is rent control..its a great business and well position quality parks on city water and sewer are about as bullet proof of cash flow investment as one can make in my mind.. once the coachs are there they done move. especially if they are pit set..

The tenant complaint about my kitchen sink - water back up.

It seems like a solid basic house : slab, block walls, single story, post-lead paint construction, and town water (wells are a Pita).

Once you have a system going, you can KEEP every third or fourth one in the way that you described above. 

For this deal, we would want to live in our current unit and rent out the other (1 bed, 1 bath)The good: New AC, water tanks, windows.