What are the risks of investing in a non conforming duplex and how like are they to happen

If you are using 3rd party management this will be a non issue in most cases.

$3k in non-mortgage expenses sounds ridiculous... that's $36k a year.

You said they are already too small, will there be enough living space?

Have a pleasant face-to-face between tenant and landlord, and I think this can be a non-issue.

For that matter, I have yet to see anything on the MLS (I haven't found a good source of off-market opportunities yet) with a cash ROI above a 10-year treasury bond (once all costs are taken into account).I'm already heavily invested in other non-RE assets (stocks, bonds, etc.) so for me to go in on a property that needs rehab, management, etc., it better be worth the extra hassle.

If using a lender this is a non issue.

Even non-conventional lenders, most likely won't entertain this.  

I recently put the non leveraged properties into an LLC and now I can’t seem to get anyone to refi me out.

I'm located in NJ and I'm looking to enter the multfamily space on buy and hold / BRRRR type deals.