Though the best returns obviously come from keeping the unit conditions fresh and modern.

That's why typically most deals will sell the property and then the investor can move into a new property where they can get fresh depreciation.

Personally I am leaning towards using other peoples money...Rich Dad, Poor Dad is fresh in my memory.

I like you just fine, you have just said some presumptuous things.You asked a question that actually gets asked quite occasionally on here (usually by fresh out college folks ;-) and it's a fair question.

Is it a bad idea to assume interest rates will fall say, 2-years down the road and baking that into some of my assumptions?

Bro you gotta relax and get some fresh air.

I could also do more value-add like fresh paint, professional photos, etc to raise the rent in a 2/2 situation where in a 1/1 I think it would be much less likely.

However, it looks like to the left it connects to another room (maybe the living or dining room) if so, I would see if it was load bearing and maybe take down that wall and make it a little more open, probably put an island where that is.For the outside, it mostly looks like it needs a new paint job, fresh grass, and some pressure washing. 

I would rather go this route than buy a smaller house just for 1 family.You will not be able to divide utilities but you can bake that into the rent. 

Typically, you get rid of ALL the mold buildup with a mix of baking soda and a toilet bowl cleaner like Lysol.