All depends on the interest rate on the primary home and if fixed.

Is there strong demand for rentals and is it potentially possible to rent a room for 1500-2000 depending on the location (slightly cheaper than a studio from what I've been seeing which is how I priced my rooms in AZ)?

Also depends if you are getting appraisal and what attorney charges for creating loan docs

As noted in articles Michael noted, this may or may not have any real impact on your taxes, depending on if you have any other passive gains/income to offset.  

As far as how much you pull out it depends on terms.

The exact amount of rent on Jan 1 will depend on whether your notice of the increase was handled according to the lease or not, but you may not want to risk providing her with angles to fight you in court just over a few dollars.

Time of year I can't get anything rented if my life depended on it right now and I have lots of vacants.

As @Carl Millsap said it depends on how much more in rent you're getting compared to the costs of renovating.

So I'm guessing it might depend on your state laws and personal situation. and make sure you know of any sticky items that would eliminate the protection you get from the LLC.

Our Teak is for the overseas market so not dependent on the Belizean economy.