You asked about buying a small multiunit property (2-4 units) and putting a minimal amount down as you plan to live in one of the units and what markets you could do this in realistically.You'd like to have the other units pay the expenses of the property while you live in one of the units and ideally some positive cashflow.There are many markets in Michigan where this is possible that offer a high quality and affordable cost of living with tenant demand, appreciation, and landlord friendly policies.To Your Success! 

Those that buy above the median home price in cheaper markets and focus on quality (renting to tenants with a 700+ credit score) are the ones that I have seen have the most success.

And while nothing is foolproof the most consistent method of finding good vendors is relying on OTHER real estate investors that have worked with those vendors.

Other good methods for adding value include: adding on-site laundry machines, building storage units in the basement, charging tenants for utilities, charging tenants for a trash pick up service, etc.Outside of that, fresh appliances, new fixtures & hardware, and professional cleaning services go a long way in making a unit look upgraded. 

Do you genuinely think this type of arrangement is designed to attract responsible, high-character, quality tenants?

You could still achieve the BRRRR method, it just wouldn't be with a conventional loan.

This will narrow your OOS gap.My team works with a lot of OOS investors here in Milwaukee and there is definitly a pattern tied to success: narrow the gap as much as you can and also buy a quality property in a desireable neighborhood.

Such methods are inherently inaccurate so they'll either overstate or understate the reality of the property.

Generally speaking, it is better to invest locally- you'll have relationships with vendors and contractors, you can meet with them and touch and see the quality of their work, etc. 

Further, MSHDA does yearly inspections, and the quality of the inspections are really hit and miss.