But if there is more profit you would qualify for from the primary residence exclusion then I think a blended approach would be very appropriate and get you where you want to be. 

Have as much paperwork (the note, etc) already done so you get the most out of your lawyer time and don't need to go in for round two.According to what I recall from staying 100% awake and attentive, I promise, during my most recent continuing education class, a lot of the compliance requirements go away if you do a) 2 or fewer private mortgages in a year and b) lend less than $1m in a year.FYI an institutional lender would ensure that the borrower doesn't get a dime of the borrowed funds until AFTER escrow disburses funds sufficient to cover the IRS stuff directly to the IRS, without passing through borrower hands.

This is not an uncommon scenario for blended households - He owned a house and she owned a house and they got married and never bothered to change the deeds. 

We have made it blend in with the surrounding farmland by modeling it to look like a barn, it is being located behind a treeline on the least productive part of the farmland it sits on.  

Being a serial entrepreneur my hobbies, interests, and outside activities all kind of blend together.

Unless a heavy value add deal to blend the cap rate up those loans are ticking time bombs because you could be in  a force sale or refi situation in an inopportune time in the marketplace cycle.

When you house hack you are always blending your living situation with your investment, so you sometimes have to sacrifice a bit on one or the other.

I chose Maine earlier this year as a blend between cash flow and appreciation.

It was a blend of joint venture and subject-to, which made for an interesting experience, but allowed me to get started with almost no money out of pocket.

That house looks adorable and seems like the perfect property for your house hack/STR blend!