@Vincent EganThat’s actually pretty clever lol

Really clever idea.

Also, don't forget all the stuff you will need to get started, furniture, full kitchen, linens etc.

From my understanding, linens are the biggest expense most short term rental investors have. 

Also located on the second level: the 2nd bedroom, full bathroom, washer & dryer, and linen closet. 1 car attached garage included.

I think my tenant has done something clever.

You can put in great linens, high quality bed and furnishings, but if it has a great view of the local dumpster fires, then you ain't gonna rate well.

Are there any clever ways where I could purchase the house for my daughter with all cash and then subsequently have her refinance and pay back the cash to me without triggering either of the events above?

Currently exploring North Linen, Southern Orchard and avoiding Franklinton.I would love to get your feedback! 

Don’t forget to factor in additional thousands to furnish the entire house, and buy a couple sets of linens for each bed, kitchen ware, and at least starter amounts of soap, toilet paper, paper towels, etc for each guest.