Sounds like you got a property with minimal out of pocket.You could try posting the room on FB or Craigslist.

I ran the numbers on the deal knowing that I would break even on cash flow in the first year with minimal rent increases but significant cash flow in year 6 when the 401k loan is paid off.

If it would help to get a more detailed estimate feel free to reach out.Documentation is rather limited, just ID, bank statement, LLC documents to start.Sometimes there are interest-only options at 30 and 40 years, generally the difference in payment fully amortized over I/O is minimal so it may not be worth it.

You need to understand that given your situation the asset and operational impact must be absolute minimal, lowest risk exposure possible.

And don't expect the compliant tenants that complained to stay after you minimized their concern and did not address it.

What steps would you recommend to minimize damages and resolve this issue efficiently?

I’ve heard different things like taking a Fannie Mae loan out then converting it to a LLC and the likelihood of triggering a due on sale clause is minimal.

Income, expenses, and distributions are automated and visible to all investors, minimizing the risk of manipulation.This model isn’t for everyone, but it’s a way to give people passive exposure to real estate without the complexity of ownership, while allowing property owners to raise funds without giving up control.Would you see this working in practice?

Doing a quick scan off I see there are about 5k STRs in Colorado Springs (assuming you are there and not a neighboring town I am gonna say the town has minimal restrictions).

I mean this stuff happens in rental houses that are nice and newer or new. you either keep them in great shape which cost money or you buy rentals that you simply do minimal work on as the tenants paying 700 or 800 month have a very different expectation than a tenant paying 1700 a month.