The cash flow to LL using PM for STR is not substantially different after including extra expenses than an LTR.  

I worry that providing the money upfront (if I'm understanding the details correctly) will create potential problems down the road if people use the extra money to purchase homes they can't afford.

They have actually paid down extra principal every month.

Many sellers were skeptical of FHA financing because of all the extra steps.

I spent some extra time to carefully craft my answer to be as much positive and as less negative that I could I still got and rude and arrogant answer back suggesting that I don't know what I'm talking about.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

And I just gained an extra 3 houses that my new tenants are paying off for me.

I'm wondering what am I allowed to do with the 150 square feet besides ingress/egress.For example: Can I add 150 square feet to the structure, including an exterior door, and then use the extra 150 square feet for a kitchenette?

There are many maybe 80% of them will not share much information with investors or landlords, it’s not their job and frankly that’s just extra work for them the case workers.

Smaller square footage compared to Whisper as a 4 bedroom, which might limit potential rental income.b) Whisper, San Marcos:Larger home with an extra study room, which is a valuable feature for potential tenants looking for office space.