I like to use removable pillow covers with down inserts.

In my office - applicants cover the fee entirely. 

You're asking the $1,000,000,000,000 question - there's no right answer, but there's only the right answer for *you* because its so subjective. 

If the water bill is $100 a month, increase the price by 20% (or whatever you decide is fair) to compensate you for the time required to split and bill and to cover additional use when tenants squander the utility.

I was criticizing Airbnb for not immediately covering the cost.  

If you can cover small negative cashflow without destabilizing yourself or the property it's not a problem IMO

Not going to kill it on the rental income, but if you sell it subject to, there is a lot of equity.

Would it be smart to tack on another 203k in the future assuming my income covers payments?

The plan was to utilize the HELOC as the down payment then getting a conventional loan to cover the remaining 80%.

Here is what the IRS says on the subject: Election for Husband and Wife Unincorporated Businesses A business owned and operated by the spouses through a limited liability company does not qualify for the election Only businesses that are owned and operated by spouses as co-owners (and not in the name of a state law entity) qualify for the election.