Also, if tenant were to be late (use grace period) he would not be able to pay since payment series no longer exists.

If you truly qualify as a RE professional you would want to do everything on Schedule C.

Do I have a shot at even qualifying for a mortgage with that income?

@Grace Galang The only thing you can deduct from the property (ADU) is the expenses associated with operating the STR.

Don,,  Its hard to qualify success or failure as an agent..

DSCR is for when you can't qualify on your own and want the rent to be the collateral (in very general terms) and when you are house hacking, you want the low money down.

So the question is, does your rental activity qualify as a trade or business or just a passive investment? 

Imagine we reach a time where interest rates are higher so it is harder to get qualified, your HELOC balloon is coming due and they will not renew.I'd put in place some permanent financing on you long-term holdings.

It is very tough to finance these because most properties and borrowers do not qualify for the financing criterias on a competitive CRE loan. 

When you bundle 3 properties, you'll qualify for a DSCR portfolio loan with many lenders and it's easy from there.5.