Like bananas and grapes or squash and green beans, they are fruits and vegetables but with different qualities, benefits and drawbacks.  

This strategy has drawbacks.

In my state LLC setup is very easy and inexpensive, the only drawback is filing another tax return (but I pay my accountant to do that anyway).

Weigh the potential benefits and drawbacks of each option and consider seeking professional advice to make an informed decision.

The upstairs guest being noisy for the downstairs guest is the only draw back I can think of in regards to renting them out as STR but I'm hoping that with the area (a little away from Pier Parks madness - hopefully have more respectful guest than not) and some nicely stated ground rules for being mindful/respectful to the downstairs guest that we can avoid some head aches... even though we do know that we'll still get headaches every now and then because it just comes with the territory. 

The only drawback I can see in this scenario is that my wife would likely not be able to represent the plans as real estate agent (i.e. earn commission) in those transactions, as she would be considered disqualified person, right?

But it comes with drawbacks.

I didn't see any properties I could find in decent areas which were doing more than this for the past few months Memphis 4% is not great unless you live there as well.For LLC the drawback is you can't get conventional.

Overall, I don't think these slight annoyances should mean that you preclude an entire class of potential tenants, but they're something to consider.The one thing that I will say is a very real drawback is that Section 8 has to review and approve your proposed rent increases - and they will not approve anything more than a $25-50 increase.

The only draw back is you need to be good with using excel and customize a spreadsheet so you can use it to count usage.