Risks and rewards to this type of tenant? 

STR can provide more cash (potentially), but its a high risk high reward strategy - if you invest in the furniture, staging, photos, and management or self manage, there is a lot of time and money invested.

I definitely agree that rent by the room is awesome for increasing cash flow - again, it does come with it's headaches but with the higher risk comes higher reward (I've been doing it for almost 3 years now, it's really the only way to make the numbers work with little cash down on properties).From my personal experience, talking to others at meetups, and reading this post, I think there's definitely demand for specialized rent by the room property management.

Risk vs reward.

The bottom line is, the strategy can open doors you didn’t even know existed.. it’s not just a tax hack, it’s a wealth-building strategy that rewards a little patience and a lot of foresight.If you’re floating around Chicago, Omaha, or even dipping your toe in the Phoenix or San Antonio scenes, I’d love to help you navigate this territory.

No risk, just reward—whether for personal deals, joint ventures, or simply passing along awesome prospects to each other, I’m always actively prospecting for new deals and sharing them with my network.Let’s collaborate, learn, and grow together!

Given your limited cash and high DTI, refinancing after boosting rents might balance risk and reward best.

@Steve Morris are you assuming the risk is high based on the reward?

Adjust return based on holding time and risk reward.  

You have to enjoy and reward yourself sometimes.