If it comes out to be a cheaper cost than renting or buying a comparable unit without house hacking it, the deal can still have merit in that way. 

In any investments there are different strategies and ways of doing things, all of them have merit and should help guide you in finding your own investment path.  

It would merit figuring out if LR has anything to offer as an investment town, and if so then you may be on to something!

I've been debating the merits of STR vs investing in a buy and hold/traditional rental.

Note I have been threatened with law suit many times (likely over 50 times - but most have so little merit they are laughable) including multiple times from the same lawyer. 

There are some merits to owning your primary residence free and clear, but it certainly slows down your expansion.

So I would make sure you keep your eyes open for pitfalls when absorbing other peoples teachings/wisdom, even mine, or especially mine :)  Go do your own homework, find other opinions and weight their ideas by their merit.

We have one person providing the capital, one construction expert to oversee contractors, and someone to analyze and acquire the deal (this may typically merit just a finders fee?).

So the basic concept seems to have merit.

Additionally the argument that improved fiscal responsibility is the solution, while it has obvious merits, does nothing to address these points I am touching on or that @Boris Suchkov explained in further detail.