I currently live in the Bay Area, but I’ve decided to start investing in the Jackson County/MO area.

She prefers they sell the house right now, as is, and live off their profit.

Hi Jared, I'm a former OOS investor myself who now lives in Indianapolis and works exclusively with other OOS investors looking to grow their portfolios here.

I think everyone's situation is different, and when one crafts their buy box, they need to consider their current family and finances.For me, when I started, I wanted to buy 2-4 unit distressed properties in neighborhoods I wanted to live. 

I'm assuming that this situation wouldn't pass inspection, but one could argue that all the spaces the guests have access to (i.e. bedroom, bathroom) are safe and habitable + the guests wouldn't be exposed to the kitchen.Also, do the city inspectors inspect other parts of the home the guests won't access (i.e. inspectors check the basement for water infiltration even though no guests would ever be living or even going down there). 

Here's a little background on Tenant situation...has 2 or 3 young kids, an adult sister, an aunt with her male friend and the lessee has a male friend, that all appears to live in the apartment but aren't on the lease.

Since we live in Orlando area, we are looking at a STR in Disney area. 

Easy living, comfortable furniture.

another property to the portfolio, and a continued relationship with a live long client

Will be difficult because you currently live in the property . is the 2nd unit livable and just looking to renovate ?