But those are nice cabins with more than one special factor: incredible views, high-end design, amenities.But I run numbers on potential short term rentals all day, and 4 out of 5 are less than 5% CoC.

But you're wasting your time until you know what that property is worth in your view and compared to the real market.

@Ranier Moore All properties should be viewed independently and for their own merits.

Slightly unrelated but important for @Heidi Ann Faller to know: A net operating loss cannot offset capital gains since the IRS views these are two separate forms of income.

I wanted to take the opposite view though. 

If the tenants don't pay for the water they tend to view it as a free resource and as a result there is a lot of waste.

As other have stated, remove the owner form occupying the basement and remove the stove so its not viewed by a  lender as a fully functional apartment. 

I also strongly believe that if the first impression is bad it takes a lot to change that view. 

Reason is what happens if the home needs repairs, do you have $ to cover it or if prices dropThey also will typically want a personal guaranteeYour best bet would be to find someone you know as the conventional private lenders will view this as too risky

Yes, you can absolutely purchase a property with a conventional loan and honor the existing tenant lease.In fact, many lenders view occupied properties favorably because it means there's a guaranteed rental income stream from day one.