Therefore they can sit back and accept say $5000/month on a multi whereas me buying it, now I need full rent amount which is closer to $6800/month.

Good neighborhoods, excellent schools, and literally--where does the house I want sit in the actual neighborhood...I say does it look like a $650K house area when I'm done?

I think your issue is (if I recall your other post) that you don't have any experience as a co-host but are trying to gain it by offering your help for free.

If you need the lawyer's name let me know.So now I'm sitting on owning an empty lot and still making loan payments.

And Scott's answer would be: because no one who wants to buy a house in those areas has 40,000-50,000 cash sitting in their bank accounts.

I realize that's a lot of equity to be sitting there so my question is what would be best move to try to increase income now.   

Property was sitting on market and needed light updates (roof, flooring, paint) but was in a great area that allows STRs giving me multiple options when deciding on rental strategy How did you find this deal and how did you negotiate it?

Nothing wrong with partnerships - I have used one to scale way faster than I would have on my own because he brought skills I didn’t have - but if you can do a deal on your own first to get a better understanding of the entire process it may help you identify what you need from a partner and what types of things should be in the operating agreement.As for the operating agreement, be sure you sit down with an experienced attorney who will help go over the dozens of scenarios that may come up and how you would like to handle them. 

And in fact, we are just sitting and holding onto lots until they are able to be fully permitted already as is.

We are low hanging fruit, sitting ducks, vulnerable.