The reason why I ask is because that could determine what loan options are available to you (and interest rates). 

We could build larger, but there will be less Buyers and the home can potentially sit for longer and holding costs get expensive.Not saying building larger is wrong, but just giving you our reasoning for our home size.But I do 100% agree with you. 

I would guess an older home might be more cost to insure?

House hacking a duplex is a solid way to get started in real estate while keeping your living costs low.

It is also for that very reason that you should be wary about going in as I do feel that the Pittsburgh has gone pretty high up in it's property values. 

It will likely be cheaper than the cost of financing.

A big reason is the OO requirement to rent the JADU as its own unit,good luck

My total cost is 40k, can resell at around $130.

The second thing would be simply the costs, themselves.

Reporting the proceeds you pay to seller on a 1099 sounds reasonable.