Just be aware that many people are using the same strategy and as a result the prices of small multifamily properties have dramatically increased over the last few years. 

Also, if you buy the property, your property taxes are going to increase because of the new, higher sale price, so go to the Property Appraiser's website and see what their MIL rate (usually a combination of both the county and city),  Finally, run your numbers through the BP Rental Property Calculator. 

The moment the pre-payment window is done, the investors chances of loss via refinance increase.

When the time for the Refi comes around on a 1-4 unit property, I was under the impression that the appraisal is not based on how much you have increased the rent during your hold but rather just the typical appraised values of other similar properties in the area (whether it be other 1-4 unit properties or single families in the area) and that the increasing of the rents while holding the property only comes into play when the asset is a 5+ unit property - is this correct?

It's unlikely that any actual tax would be due because of the increased $11.18 million lifetime exclusion, but you're supposed to track the exemption used and technically have a filing requirement.

Once she is paid off the cash flow is all yours and your P&I payment wont increase because of a higher loan after the refi.It would be nice to no some of the figures .

By requesting a jury trial, they increase the amount of risk, time and money involved if the parties do not reach a settlement.

This is because it was purchased to be a good home and not necessarily a good rental.If I were to invest OOS:I would not choose the highest cash flow Midwest locals but would look for a location with increasing population and constrained in some way in their RE growth prospects. 

My question is does it make sense to hold a single family in a market that the rentals are low compared to the sell price and focus on the long term value increasing or should I sell and have a clean start in a new state?

With enough units you could benefit from discounts.I'll send you a direct message with more considerations when searching for a PM.