I’d just raise rent by $5 per month lol  At the end of the day it wouldn’t be about the $5, it’s the value it brings to the tenant. we may even wave the $5 so it would only be $12.99 a month  

welcome to bp, your sentiment around leverage is 100% correct, and I'd challenge you to follow your own advice and use that leverage to put as little as possible into the real estate rather than the coveted "pay cash for it" or while one can pay cash, utilizing your w2 to refinance is a unique skill and ability you can have.house hacking in the mid west is where its at for sure.

@Steve Babiak correct! 

As for the insurance situation, @Jaysen Medhurst is correct, that your insurance company will be concerned that you're using the property in a way that it wasn't technically intended, even if it's property setup for a three unit per building codes.

But what you’re encouraging is that when I am 23, I should use the first 4 or so years just building a portfolio of LTR’s and then when I am 27, look into leveraging STR’s to meet the “Real Estate Professional Status” and “Material Participation” the IRS outlines, correct? 

Appreciation is the most attractive thing about the miramar and destin market if you buy the correct property!

. - appraisal could come back subject to corrections. - unless you get some whacko judge, there should not be any issue collecting rent on unpermittted unit, having a move-out cost (no fault eviction) in excess of the standard rent control or eviction process in excess of standard rent control hurdles.    

Asking in the correct forum will get a better response.Need a spreadsheet or form?

Honestly, since you are identifying the problem and correcting it, I'd stick it out and push through. 

Once corrected and on the correct path the screening went smoothly.