I'm in this strange position of being out of state and unfortunatley not having the time to visit or gain personal expertise.

When I die, they can keep renting out the properties or move into the SFH, or take the step up basis and sell it with not as high of a capital gains tax hit (I hope they wouldn't choose the 3rd option).

If you've enjoyed a lot of appreciation in the value of your primary home, you may want to start a timer to sell before losing the "lived in the house for 2 of the last 5 years" capital gains exemption (limited; not infinite, but big).  

They are going to be the cheaper alternative for SFR, so in theory you should get some decent appreciation gain and good tenant pool.3.

This approach can lead to both short-term gains and long-term success.If you’d like to discuss this strategy more, feel free to reach out—I’d be happy to share some insights.

I have studied the market there for a bit now and am comfortable with investing with decent Cash Flow and modest property price gains.

The way I see it is 25% down out of state means $100k in down payment/closing cost to obtain turnkey property that gains equity similar to an IRA or 5% down managing a renovation in the property your living in which in turn pays yourself from the equity gains which allows you to get to multiple house hacks very fast. 

But as I mentioned, IMO you dont loose a whole lot by having it and stand a chance to gain for little extra cost.

I gained some experience in being a general contractor by managing & working on some renovations on that other house.  

You make more when it's uneven and you can live in the smaller unit.Focus on the asset and the area, as long as you can withstand net negative or breakeven cashflow, and you will gain in appreciation.