As a general rule of thumb if the property has a ground level commercial requirement in order to show sufficient hardship to seek a residential use change the property should be located in a location that is not conducive to commercial use i.e residential street, close but not as marketable as properties located on neighborhood's primary commercial corridor etc. 

@Ginger Vaadi I would agree the 50% rule probably more accurate over time.

I was on a Senate Steering committee way back in 85 on how to deal with all the platted antiquated lots in CA. there are millions lots created before the modern rules and these lots exist today but many are not buildable and are traded back and forth from tax sale buyers to retail buyers who dont realize their 5k lot in CA is non buildable.So there was a big conference in FT.

But when you can qualify and deal with the process before then - usually worth it to do bank options like this until you hit the scaling point (could be 3 rentals could be 5, could be 10 etc - no real "hard and fast rule") 

It is the IRS rules around short term rentals.Loophole - A way of avoiding or escaping a cost or legal burden that would otherwise apply by means of an omission or ambiguity in the wording of a contract or law.

Generally there is consensus that DSCR Lenders can only offer a 1% prepayment penalty for up to 3 years in MI, but some lenders have recently reportedly been flaunting this rule - I would just tread carefully here in this area, generally not advisable to get potentially tangled up in a flawed legal doc with a non-sophisticated or fly by night lender

I don't think there is a hard and fast occupancy rule for VA because you get a VA allotment.

Yes the tenant could have done things differently, but just as a manager is responsible for the people under them and their actions, same applies to you as the landlord.

While it doesn't meet the 1% rule it's in a stable, desirable area that'll perform more consistently for you over time so it's worth the tradeoff in my opinion.

Also, achieving the 2 percent rule in my local market is near impossible but could be achievable elsewhere.Thoughts?