If you're unsure of your desired type or location of the replacement then work with a number of professionals till you're the smartest kid on the block in each of those markets. 

I don't see this as a road block and a good strategy for an owner that has a small MF that is fully occupied.

Not going in a bad neighborhood at 10:00 at night for an emergency 2) because I wouldn’t rent where I wouldn’t live 3) because I’ll be paying more in homeowners insurance than rent coming in 4) because I would spend more money than the home would be worth trying to put the best flooring, appliances, fixtures, and other amenities so that it would look the best on the block. 😊.

The house had good curb appeal, also the house was over 2000 square feet not even a block away from one of the hottest neighborhoods in city.

I say "yes", but they'll have to take a 'block' of units as I don't feel like leasing a single random unit in an apartment building to someone that'll be doing STR. 

She can go down the block or the the State Insurance Pool and get something back within a reasonable range.

If it's a straight rental you want to keep a single-family as a single-family because it won't be an easy conversion, especially in South FL, if there isn't any of that on the block and it also won't be cost-effective.

In my area most sell near downtown or the college at 6%, 5-10 blocks away and it rises to 7.5%.  

There probably aren’t any crazy laws prohibiting what you are trying to do, but your very first stumbling block (aside from liability exposure....especially with a garage renter) will be when you go to do your taxes the first year.  

As many, many contributors on this site and in the Indianapolis forum have said, Indy is a very "block-by-block" city.