I plan to manage the bookings and do cleaning in between clients, so I will meet the "substantially all" materially participation requirement.

If your goal is to minimize fees and have the lowest rate, I would normally advise the client to start with their current bank if they have a clean file.

However one thing that would make trouble for me was that I had some pretty high standards I was keeping the tenants to in an effort to clean the buildings.

In a climatic health resort area deep in the Bavarian Forest, where the air is clean, there is plenty of nature and real estate is affordable. 

My PM is charging exorbitant fees for cleaning, products for the unit and bookings have moved to other properties.

I'm guessing this is a shared house and she's renting a room in it.For her deposit, I'd only keep whatever expenses are related to clean up and damage.

Did you include all of your marketing and management costs in your model, such as AirBnB/VRBO-type fees, cleaning, vehicle costs, maintenance, etc.?

Which causes investors to come in and buy them up and clean out the properties, which cause people to move back in.

We will usually comp cleaning fee or give gift cards to local restaurant to comp any legitimate issues.

For example, if mold was found in the master bathroom ceiling in an occupied home a protocol in that scenario may call for a pack out of the entire master bathroom and bedroom everything within those two rooms would need to be cleaned off-site and then brought back.