My neighbor has listed his but also has had occupancy issues as an STR and said that most people looking for either rooms or cheap stays but I can't comment on that as I have no experience listing as an MTR.

Quote from @Timothy Rei: The absolute best way to solve this problem would be to offer the teacher $30~$60 to cover the cost of keeping the heater on during days when the room temperature fall below an agreed upon threshold. 

The kitchen, living room, and bedroom are one room, the laundry and bathroom are together.

If you have extra cash at the end of the month, then do double up payments on the mortgages so the principle is reduced and this will increase your heloc room.

Personally, I airbnb half of my house, individual rooms, and stay nearly 100% booked.

I'd bring island out a little more. my advice is make sure all rooms are 110 sq ft minimum. some of these look super small. we build a very similar one in our market.

Also, the term "house hacking" is generally used for your owner occupied home (renting out rooms in your primary home) and that income cannot be used to help you qualify (it is considered boarder income). 

My focus is on providing either turnkey-style space for those interested in temporary, infrequent use or long-term leasing for business folks who require conference room space (or perhaps event space).  

Are their locks on the rooms that aren't supposed to be accessible?

Consider starting small by house hacking a single-family home, renting out rooms, or adding an ADU if possible.