The lender at that point can exercise the Due On Sale and it becomes a problem for the subto buyer, who now has to find new financing or lose the house to foreclosure.

If  the Due on Sale clause was called, there was no room to refinance or sell, the seller would have their credit trashed, the buyer would lose the property and the 2nd lender was going to lose everything.

As long as you don't lose money. 

Sad truth of our current legal system, but if you go through the eviction process and he loses all this stuff, you are in the clear. 

I wasn’t prepared to lose so much of my savings as carrying cost basically I paid for the tenants to live there for 3 months + my own living expenses in that time.

This could be an opportunity to add value by offering to help with clearing or relocating those items as part of any potential agreement.Why This Could Be a Good Move for YouYou see long-term potential in the property, especially with the large lot and development possibilities (even if those are years down the line).As the current tenants, you have the advantage of a direct relationship with the landlord and familiarity with the property, reducing competition and risk.This could be a chance to lock in a property that you might otherwise lose if it hit the open market, especially in today’s competitive environment.Challenges to ConsiderIf the landlord is emotionally tied to the property or reliant on rental income, they may be reluctant to sell.Financing could be tricky, especially with today’s interest rates and the gap between the current rent and what a conventional loan might cost.The development potential you’re interested in is likely a long-term play, which means the property could be financially tight in the short term, especially if you’re only breaking even or slightly negative on cash flow.Structuring a Potential DealTo make this feasible, you’ll likely need to explore creative financing options that align with both your financial capacity and the landlord’s goals.Seller Financing: Propose a deal where the landlord acts as the lender, allowing you to make monthly payments directly to them.

Yes, you may lose out on income in the beginning when first trying STR out, but you'll never know until you try. 

That's one of the fastest ways to lose money. 

We see threads all the time about people losing money and how after they add expenses and vacancies, etc. how they go in the negative.

How many tenants will you lose not because they didn't like the property but they didn't like your tenant selection.Remember my first point FLEXIBILITY, well if you decide to bail on the rent by the room, it is more unlikely that you can cashflow positive with a SFH than a duplex in Austin TX if you move out of the property.