That is in addition to clauses that require anyone that stays more than 7 nights in 12-months to apply (then it becomes our choice if they are treated as a temporary occupant or tenant) and prohibition of subleasing.

There are so many IRS restrictions and prohibited transactions within a Solo 401K that it makes it difficult to navigate.

This demographic is projected to keep increasing over time, so I would do whatever you can to hold onto this property (ie cash flow well).Furnishing 700 sqft with PB or West Elm (you and my wife would get along great, Bonnie) won't be price-prohibitive and well worth the cost.

A "lake house" might be in a residential zoned area where a commercial use would be prohibited or at least require a variance (approval) to make an exception.

Here is a video that runs down the basics - https://s-media.nyc.gov/agencies/specialenforcement/01-Legal...There is also a prohibited building list - https://www.nyc.gov/site/specialenforcement/registration-law...Here are some more info overall - https://www.nyc.gov/site/specialenforcement/registration-law..All of this makes STRs in the city pretty tough but it certainly not impossible.

Or a personal loan if interest rates aren't cost prohibitive?

I generally see literature as such, and cannot tell if having a part time employee removes the chance of solo 401k or if the custodians just don't want to deal with it:"IRS rules prohibit contributions to a solo 401(k) if you have full-time employees, but you can use the plan to cover yourself and your spouse into retirement."

@Eric Helena, There is no statutory prohibition against purchasing from a related party to complete a 1031 exchange. 

For most investors, to provide true separation would be cost prohibitive (between $10k-$15k). 

In a university town nearby, student housing is restricted to certain areas of town and prohibited in other areas of town.