They will have the front door entrance through the common space.

At the end of the day, I can tell you from experience that it is very common to purchase property using an LLC formed in a different state than where the property is located.I recommend you connect with a lawyer in a state in which you plan to purchase property and/or in the state you intend to form the LLC.Good luck!

(Roof, windows, doors, HVAC)- large fenced in backyard - 2 car driveway in a location where driveway is not common- Overall, interior is up to date and property is in a good condition and area.How would one should approach this to make it work for both parties?

The pitfalls are the cost to close the loan and prepayment penalties (the article does over all of that).  

There are a lot of pitfalls with self managing as well, and if you are not well versed in the fair housing laws, landlord tenant act, etc, you can open yourself up to liability that is limited by using a professional property management company. 

Some have HOA common water service, built into HOA dues. 

Is a prepayment penalty common on a mortgage?

A very common project management fee would be 20% and this will a lot depend on the scope of the project and the net returns.

For example, doors should be inspected on both sides, the spine (most common area to split from being kicked in) and the frame.

It's still a great strategy - just need to be aware of the potential pitfalls, too.