And will I have to go through probate to have me recognized as the owner.

When you have been on that treadmill a while, it's hard sometimes to see that the only winners in life are those who are genuinely happy in what they do everyday. 

Add the costs of the rehab, the hassle/risk of placing new tenants (PMs typically charge 0.5 to 1 month rent for placing a tenant and that does not include a dollar value for the risk associated with a new tenant), and the potentially bad karma.We often let our best tenants rent fall below market because we recognize the expense/risk of placing a new tenant. 

(I will also mention that if you think it was genuinely set up a as a 2F in the past, there is a loophole for documented used prior to the zoning ordinance being adopted, but you would have to go back in the census archives from the early 1900s, and it doesn’t sound like this property really meets that description.)So I still think you should definitely ask in person, but I want to set your expectations that while the bigger lot is good (and would be a point strongly in your favor if this property was in R-2 or higher), I think the fact that it’s an R-1 zone makes this one an uphill battle to convert to a two-family.

You not only need to sell their house, you need to sell yourself and be genuine when doing it. 

I recognize this isn't exactly like kind but wondering if this has been done or if there is a multistep process involving several transactions over a period of time where you can shift from multifamily to single family or vice versa?

Recognizing that home appreciation is crazy high right now, rates will likely go up in the future due to inflation, I expect the apprecation to slow down in the next year or so (just my hunch). 

Look for events put on by the names you recognize from online searches or podcasts and find out what you can about the events. 

I have recently found another good paying job but I need to be with that job for awhile for the bank to recognize longevity.

I genuinely believe he didn't know and from his explanation he was confusing sales tax vs. income tax.