Now we know the risk is above the reward too many tenants for one door.

That's risky in my opinion.

I'm not going to do any formal inspections since the price is low-enough to justify the risk. I

If you want to be successful the very first thing you need to do is calculate the risk. I

Consider improving the property, such as an addition (this is still a renovation, but less risky than buying a run down property for rehab).

The risk is they can deny a claim if you are using the property for something other than the policy type.

That way I avoid a risky refinance situation, and avoid the seller's high interest terms which aren't great.The fact that the property is next door makes it super easy to manage, and it'll add another positive income stream that also helps build up my equity.

(Assuming we are able to buy low next year)I understand that markets can change and predictions could end up being inaccurate, thereby blowing any benefits whatsoever, but allowing for the risk, is it possible for this idea to be profitable?

If you buy well (which they should walk you through) then your real risk is a few months of missed rent due to an eviction. 

From a commercial RE perspective, I would suggest looking for opportunities that are less risky in today's environment: industrial, mobile home parks, self storage.