Namely, that if a tenant (in this case accompanied by a whole family) ends up stop paying rent and I would be on the hook for both covering the mortgage and dealing with open ended legal costs and time.

Ignore the $1,250 per month because that's your cost of housing, if you didn't pay that on the home you'd have paid that in rent so that's a non factor. 

Is it common for developers to use subsidies to cover 100% of the construction costs without needing to obtaining debt or raising equity?

Here are some indicators to help you assess a buyer's seriousness:Questions: Serious buyers will ask detailed questions about the property, such as maintenance costs, neighborhood amenities, and property taxesStrong Offer: If a buyer makes a strong offer quickly, it often indicates a high level of interest and intent to purchasePrivate Buyers: If approached by a private buyer, ensure they provide a Letter of Intent (LOI) and proof of funds.  

I would need to consult tax consultant for this however I expect to reduce my effective costs by ~$1,495/month (based on a 32% tax bracket).2.

By my estimates, pricelabs cost me approx $25K last year in lost revenue for some of the same reasons you've listed in your post.

HelloOver saturated STR in Ohio markets have caused many STR to drastically lower costs to as low as  $100 for entire bedroom home.My are higher and I'm not competitive with the lower cost Abnbs.I also feel hotel industry are mass building new hotels to compete with str. 

(It’s multi-family but not entirely stabilized.)Rehab Costs: How much should I budget for bringing vacant units to market-ready condition?

I will say, short term rentals require a bit more work, and if you are moving out of state, you may want to take a look into getting a property manager ( take that cost into account when running the numbers ).I hope that helps, reach out if you have any more questions. 

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.