My big concern is what happens if the single toilet goes down and there's no other option.  

It sounds great on paper, but I think in all fairness that this will especially hurt small businesses that cannot afford to pay such wages.

But the vacancy/ collection loss risk can eat up these "paper profits" pretty fast, along with the older housing stock issues in general... which just run higher on maint. 

Its sort of like the IRS considers flipping a job, rather than a RE investment.Income from buy and hold properties can be tax advantaged, as you can take depreciation, a paper expense, and recognize the gain at time of sale as capital gains, not regular income.1031 exchanges are very complex.  

The house hacking idea sounds great on paper, but nobody wants to live next door to their tenants in a C neighborhood, at least not for very long.  

Is it terribly unusual to weed out unqualified applicants by requesting a paper application before showing them the property?

So the market is equally important when considering a self storage acquisition, and you need to underwrite it with ALL of the expenses for the facility, not the 3 expenses the seller shared with you on a scratch piece of paper. 

At first they simply asked for proof of transaction, ok easy, printed off a paper with me signed in showing the specific dollar amount sold and withdrawn to my checking account.

You should get to the point where you can run the quick and dirty numbers on a property in 15-20 seconds without a pen and paper.

I may try my hand at a flip someday, but for now, I'm happy just flipping the paper.