If the policy lapses many insurance companies are not willing to write a policy on the property.

Real estate agents don't just write up contracts, but we're friends, therapists, and punching bags LOL.

Since the owner is going to hold the note can you have him guarantee that there are no issues (in writing) and if there are he adjust the note accordingly?

It comes down to your comfortability.With 2-4 units, you would qualify for a higher loan amount because they factor in the income from the other units.Whenever I write offers that are not accepted, I always ask for feedback as to why the other offer got accepted.  

Fees should be clearly stated in writing, easy to understand, and justifiable.

@Ari BachrachI got tired of answering this question on multiple threads and reading comments that could be unclear at best or even misleading.So, take credit for making me write this long explanation on a new thread: :)https://www.biggerpockets.com/...

OR a second idea, how about "rent-by-other-means" which I am of course referencing Contract For Deed sale, which is NOT a lease and therefor exempt from rent controls, yet can be written in such a way that operates all but identical to one, I'd argue even better because I can write what ever my heart desires into the terms.

Just write the lease such that they are both financially responsible and not separable.

Hello,I see there are plenty of other posts with great information regarding tax write-offs and AirBnBs, but I am specifically asking about write-offs in conjunction with using a STR management company. 

The best thing to do in scenarios like this is to write down on paper each financial situation. 1 being the sale and what you net out of it after taxes (if any beyond your primary residence exemption).