This is common in my area/Colorado in general especially the ski towns that still allow short term rentals. 

Three units to maintain.Although I need to do the math, scenario 1 strikes me as more economical as there are shared costs gained with a multifamily property.

Surprise in this scenario means it pops up annually, rather than monthly/quarterly.

But you can offer a "buy out" agreement to the tenant, and yes, 2 months' rent value is commonly seen.

Needs and Wants:What are some common needs and wants that rent-by-the-room tenants face?

No update of common area finishes although clean and well maintained.

Both of these products, HELOC's Vs AIO loan are first position mortgages and typically start out with interest only but its important to note that HELOC's are based on prime predominantly while AIO loans are usually based off CMT 1 year Index.If there are any questions on how this applies to your scenario or the risk assessment for your portfolio feel free to reach out and lets discuss.

This is exactly what the "far right" talks about all the time, except it's not "far right," it's common sense.

Their prices seem reasonable but not sure if it's a "too good to be true" sort of scenario...

Get on the phones, you'll know who knows what they are talking about when you run a scenario by them..Glad to connect.