This is a Maryland Historical Property, zoned for residential high density, with specific limitations on its usage due to its zoning.The property is massive, offering 8,276 square ft of space, including 5,445 square ft of finished area, and it features a substantial driveway.

I understand there’s some nuance state-to-state in terms of deed of trust usage vs. using a mortgage for the second lien position (our investor in this case).So that we can arm ourselves with the most knowledge going into discussions, could anyone advise what the setup process actually looks like here?

In cases like that for homes, they will often work with the occupant and usually lower the bill to more the normal usage.

For questions #3 and #4, you need to have a reasonable and ordinary expense for doing this, and you would likely need to track usage. 

Investors connected and contacted me from BP the third week of May, frustrated with their STR search due to licensing restrictions, but committed to finding a coastal second home eligible for vacation rental usages before the end of summer. 

Everything in the home will get double usage, especially the appliances.....Also make sure your liability insurance knows that they are now responsible for insuring 6 people.This just sounds like a bad idea to me....

This can reduce rates, improve cash flow and un-encumber properties for other usages. - Borrow more or less than you need.

If it was municipal water, I would bill the tenant back because the cost would be variable based on usage. 

I am leaning heavily towards doing submetering of gas and water on the property and billing the tenants back based on the usage.

Specifically, that exception applies when "only a PORTION of the main home is used for business or rental usage"....