I am purchasing duplex, just found out after the home inspection it needs a new main water line as the old one is galvanized steel and is affecting the water pressure drastically.

Is the purpose of this to keep folks depending on, say their fixed w-2 income to qualify rather than rental income? 

If you can show that was the purpose of the property and hold it over a year a 1031 may become a possibility. 

Can ABC LLC continue to be the main contact on behalf of the new Investor?

As a general rule, you want to use an S-corporation.While liability concerns are an issue, that is not the main reason I am saying to use an S-corporation. 

@Michael Pursell Sorry I meant to say I think the in-law idea would work because it still is separate from your personal space, although I'm using the word "bedroom" for legal purposes.

And I was on a few senate select committees in CA in the 80s purpose how to deal with these antiquated subdivisions that can never  be built but the lots are of legal record.

I'm not sure if Indiana offers a non-NFIP insurance option or not but if they are like Ohio than NFIP is your only option... however not all agents understand how NFIP works or how to give you coverage options.If your main goal is checking the box for flood insurance at the lowest possible cost I would suggest asking the bank what is the least amount of coverage  and what is the maximum deductible they will accept - then get an agent to quote it that way.I'm NOT saying this is a good idea to insure your property this way - you really need to investigate the risk and talk with your agent on what your level of risk tolerance is.Many agents will try and quote it at the full reconstruction cost amount like it's an owner occupied property.

It’s a rural river front property and main highway exposure is Airbnb a good option in the valley?

A way that I think I could really come out on top is by living in a garage and renting out the main rooms.