Limited space for expansion ensures a housing shortage, driving up property values and rents.

Roof and attic insulation are key factors in controlling the heat load.Commercial HVAC sizing is based on that plus the addition of heat from air supplied from the outside to replace "stale" air indoors - local ordinances often require specified amounts of air replacement - in an occupied space and also from the number and activity of individuals expected to occupy that space.

As far as renting garages or extra space my insurance will not allow me to rent anything to a non-resident.

Definitely second this - if you were thinking of taking 65% for yourself I would imagine you're pretty new to the STR management space (not a criticism, just an observation).

Instant water heaters take up less space and come in electric or gas versions.

We can discuss it if you are looking for space for residential assisted living. 

This would qualify even if the portion used for investment is a part of the main living space, because even though it's being used for investment it still qualifies as your primary residence.

This house is currently a 2/1 but with the additional 480 sqft of living space (main bath, dinning, walk-in closet).

Examples to kick it off: adding solar panels, vending machines, advertising space, allowing credit card rent payments w/ fee. 

If the space is big enough you could even add washer/ dryer.