Depends if you are looking strictly cash flow or needing appreciation as well.

The IRS has strict rules preventing passive losses from offsetting active income unless you qualify as a Real Estate Professional (REP).

You're treading in RESPA-infested waters there and these are federal, not state regulations.Referral fees for ANY closing services on residential loans are strictly prohibited under RESPA regulations. 

Am I still being too strict for class C tenants with the above-underlined criteria??? 

But the trick to a budget is making sure it satisfies your needs so you can stick to it - like they say about some diets - compliance is the science . 

Places like Dallas and Plano many not have strict regulations yet, but seems like the community is firmly against STR, so that's probably not the side you want to be on.   

I bought it strictly as an investment property.  10% down, conventional, no PMI.  

We have strict criteria and only buy if we can properly segment risk.

As far as investing for income and equity I am moving strictly to Syndications.  

Part of the value add strategy is to covert a number of the units to mid term rentals (30 days or more) as San Antonio has become more strict on STRs.