So I think one thing you might need to add to your calculations is the projected value of the house over time and any anticipated rent increases.

It is so difficult to police and enforce guests, I would focus on the increased water bill. 

Equity from appreciation and loan principal payment will be captured in ROE; hence conversion to increase unit count and bump up cash flow.

Prior-year losses can’t offset W-2 income but can be used for capital gains or future rental income.For audit risk, high earners using REPS face increased scrutiny, so be prepared with detailed records.For material participation, keep a time log with tasks, dates, and hours spent on rental activities like tenant management, repairs, and bookkeeping.

I'd also target markets with good population growth & economic drivers that are helping the market progress. 

This would increase the property’s value to about $608,000, and you could look at an 80% loan-to-value refinance, which should give you enough to cover most, if not all, of the remaining balance.This structure allows you to minimize upfront costs and take advantage of property appreciation over time.

That all adds up to home prices increasing well into 2025 and 2026.If you refinance now you are going to get a better rate verus a HELOC for example. 

Daniel,Seems you do have a lot, it seems there are a lot of "predictions" to values / costs increasing in there, one thing i saw is that you have loan Interest payments/ cost increasing every year too, if you have a fixed loan those costs will not increase, they will decrease and your Principal payments will increase.

If you are looking to increase your occupancy and ADR, it does.  

That said, it can be done and done successfully if you plan in advance, build your team (contractors, subs, back ups, lenders, credit with suppliers, escrow/title, real estate attorney, mentor, etc.) get educated on finding (marketing) for deals, rehab costs, locations, market data (like crime rates, school ratings, population growth, job growth, etc), specific market insights like what is most popular and sells for the most in your area, etc