You have gotten so many great tips already.  

Focus on running a clean operation rather than perfect technical compliance.Pro Tip: Your biggest risk isn't the IRS - it's partners who might complain to the IRS.

What made you interested in investing in this type of deal?

Start with BiggerPockets Ultimate Beginners Guide (free).

You have already laid out both scenarios. 

There are many markets that fit this description.

This area is going to grown big in next few years.

I hope this helps!

My goal is to rent it out to start generating some cash flow.I’m planning to remodel the kitchen soon, and once that’s done, I’d like to move out to make the apartment available for renters.

Im not an STR SME - I would check with Mike Savage and Dan Rivers - theyre the local experts on STRs.