I will update this post when I get the final result on the deposit. thats interesting every time I have had an issue with an Actual auction and the authority wanted to cancel we got all out money back they never kept anything.I did have wells fargo sue on one though were the bank claimed priority over our position we bought at foreclosure sale.. we had to settle that and pay..

However, there also seems to be evidence from committee meetings supporting short-term rentals being authorized in historic neighborhoods like mine as long as guests adhere to a 7-night minimum stay.

Ther are a LOT of hidden expenses that go into holding rentals that many new investors don't recognise.

How will appraisers, lenders and tax authorities account for this? 

To be fully city compliant  you must have an "authorized property" manager that lives in The City of Cleveland if you are out of state.

What is the minimum interest rate we can charge for the seller financing without causing any red flag with the authorities?

.- lower turnover- easier on the units when they do move- quiet and less disturbance than traditional, younger- for fixed income, consider partnering with the local housing authority for SEct 8 vouchers, then raise rents accordingly - guaranteed money & the Sr. only pays a portion (if they qualify)Traditional renters- Higher turnover- Higher turn costs- More volatile - higher bad debt- More drug related activities- Adding in children that are hard on units- Higher eviction rates and legal costsConsider all angles before making a decision with the changes. 

She doesn't own the property, under what authority does she have to issue leases?

I've been seeing: AS-IS contract, Sub to addendum, Authorization of release, power of attorney.

And I maintain that IRS Publications are not an authority for anything and contain multiple errors.