You have a good room/bath ration and decent size.

DSCRs are easy to do, and will be so much easier given you have the two units rented out currently.DSCR loan do not look at personal income, they only look at how much income comes from your property vs your monthly property obligations,i.e, principal interest taxes, and insurance(PITI).For example, if your rent total monthly is $1500 and your PITI is $1,000, then your DSCR ration will be $1500/$1000= DSCR ratio 1.5.

And if the STRs aren't bringing in full time residents the economic base of the town suffers while housing gets scarcer.I'm not anti STR, but people who oppose it are starting from a perfectly rational place.We have done STRs and they certainly aren't 

If the revenue is $4,840 per month, then your expense ration will be 50% on this deal and the net income only $2,420 per month which makes the correct price more like $300,000 or less (around a 10% cap rate) and not even remotely close to $550,000 (around a 5% cap rate).Unless I'm missing something here I would run away from this deal at the speed of light unless you can get the price reduced by around 50% or more. 

It's often hard to find deals so when something marginal comes along, many of us have a tendency to rationalize ourselves into bad deals.  

. - Loan to Value - Debt Service Coverage Ration - Term - Rate- Amortization - Cost to buy down rate - Origination fee - Appraisal amount - Is there a pre payment penalty - any other fees? 

1 - This is an expensive rationalization.2 - The math always wins...always. 

So if your prospects say "it's the Midwest" as their reason for not taking on any investments there perhaps it stems from some kind of personal prejudice.But no matter what it stems from, as a Salesman you might want to think about getting prospects who are an easier sell on the products you sell--that is unless you like to spend a lot of time looking for a needle in a haystack.What is their rational for not the Midwest, is it logical for them because they live so far away or something?

Also, I can understand the draw of "we can use it when we want it", because everyone feels that way, but that shouldn't be part of the calculus in making an investment decision because then you are mixing your wants and feelings with what needs to be a rational analytical decision. 

For all its faults and messiness, my goodness I love the rationality of it.Bringing it home:  because RE investing is a people business, it's often possible to improve your business by improving your people.