I don't have a project lined up currently, as I think the project targets vary greatly on the result of this decision since there is so much equity in the condo.

We like the short-term rental idea because we could stay at the property ourselves when we want - summer break, spring/winter breaks, etc.Our budget will be right around $1M or less ideally, and we would like a short distance to the ocean.How likely is it that we could find a property as described above and have it cover or come close to covering the mortgage? 

Go to your town clerk, and look up all the information on the loans on the owner and the property.  

the terms of your agreement with the agent will lay that out

The more the better.  

I dont care if the tenant is paying themselves, the government, the tenants parents, etc.

@Sung Yu the above posts are right on the money. 

After that you should post a 7 day notice or whatever notice your state requires.

I didn't see anywhere that you posted what they said ARV was, or what you think it is based on comps...the County assessment has no bearing whatsoever on value.

Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers.