If it's mixed in with your deposits and reserve funds, you may accidentally spend money you shouldn't have.

One idea might be to offer a discount or incentive for extended weekday stays—say, booking three or more nights—to encourage longer reservations.

Goal in mind is to establish my (and soon to be wife's) primary residence/house hack whilst rebuilding reserves for future investment. 

With the numbers you provided above, you will have to ensure you have healthy reserves.

The previous owners took reservations mostly by phone, wrote them on a big paper wall calendar and hand keyed CC numbers into a terminal 😲The bunk beds have been a huge win. 

According to our understanding:1) California does not recognize REP status, but we could claim it on our federal taxes, is this correct ?

At some point your business partner will want his cut (Federal Gov).

Required good credit, adequate reserves, full doc commercial loan with a personal guarantee.  

This specialized skill is rare—after working with many property managers in Las Vegas over the years, I found only two I would trust to place tenants in my properties.Contracts and processes must comply with all city, state, and federal regulations.

Do you have reserves you can show them?