That requires a compliant appraisal or valuation or some type; have not seen allocation used; it usually is a larger parcel determination or a before and after type analysis.I will add I do conservation easement appraisals, and I would be hard pressed to rely on allocation for an IRS related matter.

I know this is primarily because I see the tax advantages (IRS in the first ~10-15 years, comparable property tax basis after), but also because of the hassle to sell and as you noted, what else would I do if I sold?

When doing a diversification or consolidation exchange the IRS is not concerned with the number of properties but rather the amount.  

First I would hop into some Facebook groups for your market, look up "(your area) Airbnb rentals" or something like that.

I think banks and IRS require a second home, (ex vacation home) to be a certain distance to be considered a second home not an issue if you take primary and make it a rental. 

However, working under someone before getting licensed could certainly be a good learning tool and provide you with some ground knowledge before you hop in the industry.

I would rent to her simply because she meets qualifications and realty law does not allow or care for my opinion as to what is or is not a legit job, if it's considered an income by IRS than I too must. 

What about city liens, or IRS liens?

And if there are secondary liens against the property, they might still have claim to the property for a period of time (IRS is 120 days) which means you can't get refinance until after those liens are cleared.

After you set up your LLC with the state you can apply for an EIN with the IRS.