Cheers It's untested, but a friend of mine who runs an airbnb from one of her duplexes is hoping that since 1/2 the building is rented to a long term tenant and the other half is the AirBnB it would be hard for the city to determine that it is being run as an AirBnB.

At this time play dumb and ask them what determines value and let them reply.

You should determine your selling price and start advertising the property NOW.

Thats super helpful in determining a market.

Hello, I have done research to determine that I would like to get into REI.

So FHA would defer to my county to determine if I had one or two live-able units?

You could contact a local reputable commercial broker and determine if this property truly has value but do not waste their time, if they help you then give them the listing to lease the property if you end up purchasing. 

You will want to speak with all of the professionals on your team such as your lawyer and accountant to determine how to legally structure the transaction. 

I’m trying to determine whether to build 15 duplexes or one or two bigger buildings.

If the market determines the cap rate (in some unexplained manner) then it is not based on the NOI.Perhaps what I don't understand is how the market determines the cap rate.