I'm not sure how fast you want to scale, but I see that as a feasible alternative if you don't want to go through the process of either BRRRing or the fix and flip. 

Is Guesty or Lodgify a good alternative? 

I also recommend you discuss this with your tax advisor.There are many other alternative asset classes to invest SDIRA funds into. 

The strategy involves using the HELOC for a flip to generate fast cash, reinvesting profits into long-term rentals, or exploring alternative ventures like short-term rentals or partnerships.

Alternatively, consider a cash-out refinance to access equity without triggering capital gains or explore a 1031 exchange to defer taxes by purchasing another investment property.This post does not create a CPA-Client relationship.

Alternatively, transferring the property to a revocable trust provides income for your parents, avoids probate, and keeps you as a beneficiary, but it doesn’t allow for a 1031 exchange and could trigger gift tax.Focus on aligning the structure with your goals, whether for immediate reinvestment or estate planning, and ensure compliance with Connecticut laws.This post does not create a CPA-Client relationship.

@Matt Huber I think you know your answer already Direct real estate ownership should compensate you appropriately why else be in the alternative space.  

<<I could alternatively leave it as an "open" loft, no powder room -so 1 bedroom/1bathroom + loft..... 

If traditional banks aren't providing favorable terms, consider alternative lenders like HML or PML.  

Alternatively, the Short-Term Rental (STR) loophole allows losses to offset W2 income if you materially participate.