It sounds like you’re in a great position to succeed, given your extensive renovation expertise.As a fellow real estate investor, I completely understand how challenging it can be to choose the right design elements, especially when you want to make a space appealing to potential buyers.

Our industrial and commercial spaces have been much more lenient, but it needs to come into residential as well. 

For example, I've had a couple of 3+ bedrooms sit for a longer period of time because they only had one parking space available (and no on-street options nearby).

Secondly, you'll definitely want to confirm with a tax strategist with experience in the STR space to confirm if the setup you describe will pass as an STR with the IRS. 

How big is the space they are renting? 

Leverage your existing equity to invest in smaller properties, such as a mixed-use or retail space, to gain experience and cash flow.

My suspicion is, in this relatively relaxed lending environment, you will do well to learn for 100-500 hours and then just get started.

That will allow you to build the additional legal space further amplifying the value of the proprety (more HELOC money). 

So my question is how can/should LPs verify the lip service GPs give on their experience and handling of this space? 

You definitely need a PM who specializes in the Section 8 space.