Your STR is treated as a business and hence grouped with your other active income.

If you have to send them to collections later, it won't matter do any good, because their credit is already so bad that another hit won't affect them.They missed 60% of their payments.

I hate to be the bearer of bad news, but off-market strategies typically aren’t the best approach for acquiring multi-unit properties.

How bad does this get?

While it is wise to consider your possible resolutions to a bad tenant, the best offense is a good defense.  

There is no good investments, or bad investments.You as an investor need to decide what investing strategy works for you, define your criteria, understand if your criteria is possible in the market you are looking in, understand the risks/rewards of your critera, and then execute the purchase.While some agents are heavily knowledgeable about investments, most have zero clue.

The values they have and the way they treat people (you) matters over the years, even more than the investment typically. 

It helps you anticipate how they might treat your rental unit.10.

A lot of the properties below $100k I saw looked like in locations that were in pretty bad shape.

This is a great place to learn.Is there a reason that you are trying to make something that doesn't fit to a bad market.