Considering the local anti landlord laws what would be the best way to handle this to avoid any potential issues from the legal perspective?

Not sure what you mean; this is very common in older homes. 

The issue you might run into to get 30 year financing on a 5+ unit in AL is the loan size.

The issue with the floor is that the soft spots are likely caused by leaks in the plumbing under the floor.

Hi Lisa, As an investor, I have worked with all types of realtors, but for investment property I would say that you have to have an experienced realtor in investment properties or you have to have enough experience for the deal to work with.Experienced Realtor will help you with the contract (which in many cases are not simple), but most importantly with spotting issues in the property that could cost you thousands.Your concern is valid so it is important to sign a Buyer Representation Agreement, in which case the realtor has to work for you over his/her own interest (or you can sue him).The idea is not to sue them, but to make sure you trust them enough to work with them. 

If health issues were mentioned, they tried conveying that selling was preferable to simply losing any and all equity if the property was lost to the bank or county.

No major issues have come up in these past ~9 months.

If there is only a JV and not a new LLC formed, what forms are issued at the end of the tax year?

As to your question about the mortgage, you'll want to research something called a "due on transfer" clause to determine if that is an issue for you.These are all things you will want to discuss with your attorney and CPA.

Yes, I assume you will use tenants in common hehe.