Currently, I have about $20K left on mortgage and estimate value is$175K.

That one month of lost income will take seven months of cash flow to recover.

@Travis TimmonsI had the same reaction as you did, but I held off on posting since I don't yet invest in STRs (I'm all LTR so far, and looking into my first MTR).Buying an STR "to offset income" makes me nervous as well...

If you do budget that much, the you will easily hit your profit target.There are currently no restrictions in Lewis county and STRs work there, but there is always discussion on them by the city.

The US taxes global income which dramatically increases the reporting requirements.

At this point, I would recommend having a line of credit to cover these things so you don't have money sitting in the bank doing nothing when it could be put to work.I have 33 units, no debt except for mortgages, and excellent income.

I'm curious of the current market demand for student housing and appeal to rental investors.

This is 100% the most misunderstood aspect of rental income. 

However, before you do so you should ensure that your revenue from rental income covers ALL your property expenses in the townhome, including mortgage, taxes, insurance, maintenance/repairs, vacancy, property management, etc...

Congratulations, you get to share your partners tax burden and pay the depreciation recapture at ordinary income rates.