So, if you ever find yourself in a similar situation, just remember: with a little grit and a lot of perseverance, anything is possible.

I am not a mortgage broker, but my limited knowledge is you can (if you financially qualify) and the property has different second home features it is possible. 

So yes, its very possible to use a conventional loan to buy an investment property...but you aren't going to get owner occupant rates/terms.

For the tenants that will occupy the empty unit in the not too distant future I can make my own rental agreement, in particular, I plan to let them pay for the water as well, and I will set a reasonable security deposit.But for the tenants in the currently occupied unit:1) Would it be possible to write an addendum to the existing rental agreement to require the tenants to pay for their portion of the water bill?

The benefit of paying property management fee to yourself as earned income is the possibility of more expense deductions which could result to a smaller tax payment. 

If you are using a PM I would shoot for 8-12% although up to 20% is still possible. 

I am definitely open to going out there but ideally yes I would be doing this as virtually as possible.

I understand that one needs to have separate bank account and possibly credit card to separate rental income and expenses but just asking about from the tax filing purposes. 

A simple LLC should work fine for your purposes (based on your post, I'm not aware of your situation entirely)

Is it possible to save some money using Turbo Tax?