HOA's take a substantial amount of control away from the owner and the monthly dues will always have a negative impact on your cash-flow.

The owner will want shorter term as possible due to his age. 

Have you considered renovating it to condo conversion and being the owner of both units, renting it, and then 1031 exchanging it into another asset?

We are seeing less and less flips in LA because even at cost, construction costs are high.However, we are starting to see some opportunity because the owner users who wanted fixers have either already bought something or no longer have the cash/time to buy a fixer themselves.It is unlikely there is a crash coming in Los Angeles.

I'm curious to hear from a distance investor (or multiple states property owner), or Lenders that are familiar with this matter that should I form 2 different LLCs in 2 different states?

Sure, gross negligence by the owner may create some, but that can be easily managed.

On the books, it's just an owner contribution, the LLC doesn't care if the money was borrowed or not. 

There is a reason the units are vacant - most likely because the current owner knows he/she will not get the rents to cover the costs of making them habitable.   

I'm really passionate about wanting to become a better RE owner and operator but I know that my lack of knowledge and guidance is holding me back.

Thanks Brooklyn, I didnt mean illegal by loophole haha though I disagree about flirting..I think we should have flirted much harder to gain us some better rights as property owners :P