Unfortunately he has a not so great personality and I couldn’t see myself working with him for an indefinite amount of time.

Having gone through several market cycles since being fully invested from 1988, both stock and real estate markets, I'd be cautious about expecting $8K per month in appreciation to continue indefinitely.

I am not planning on selling it but holding indefinitely… so right now I am not concerned about the capitals gains vs. stepped up basis.

Reduced potential for near-term growth but indefinite defensibility. 

You will also have the ability to download any materials you want to keep indefinitely. 

If you're dealing with suspended passive losses, this approach locks the overhead expenses in the suspended bucket indefinitely 

Once you close on the commercial mortgage, you could "live" in one of the units while you are trying to rent it out (which might be indefinite).This could be a creative workout around your low W2 income. 

.), GOALS (some people may like working 80 hrs/week and the thrill of the chase, others want more time at home with family), desire to work alone or on a team,knowledge... the list goes on indefinitely.

The MIL will work fine if you plan to live in one of the units indefinitely, but may pose a problem if you move out and want to rent "both units" of the home.Most of the properties on the MLS with existing basement units are either MIL's or completely un-permitted (akanot legal) dwelling units. 

Why not just hold indefinitely and borrow against it?