I'm currently in the option period with it ending on Monday so I need to make an educated decision by then.

Other than Regus there are very few options. 

Also Solo 401k could be a better option for you if you're self employed with no FT W2 employees.   

There just aren't a lot of options in my area, and my kids need to live close to their dad. 

Housing options were few.  

The property is rented out for $3,200 per month, while my mortgage is $2,100, and the HOA fee is $268.I explored the option of taking out a second mortgage.

But there are options for interest only first five years. 

Stocks again can diversify (and frankly I don't see the benefit in investing in real estate related stocks - there are much better options) Are there any tax benefits?

Many investors switch over to these loans once they have a few properties (typically 5 on average, but you are right there in the typical fashion for property number 4)Check out these series of articles on the loan topic published on BP as well for all you need to know about this option!

On VRBO, when we set up the listing, they didn't have a "loft" option, so I think it's considered office space which led to some confusion or set up as a second living area.