Selling a home, no matter the condition, is always about price.

Under this idea, you'd need to see if the Health dept has any restrictions for your septic system (which i assume you have) and if the power company would meter the 2nd unit separately. 

This is because value-add properties, especially those built in the 1960s to 1980s, typically take a couple of years to stabilize, particularly in today’s market conditions.

The STR regulations are very black and white and I don’t see many, if any, clients having issues with obtaining insurance if the house is in good condition.

What's the overall condition of the property? 

If forced to cure - and it will be a condition of remedy - the tenant can take action against you for damages from leasing an illegal property. 

In the next 25 years the population of 400,000 will probably double due to the young having kids, bette health care, migration from poorer countries and Expats. 

That's why they call it Sub-2, it's subject to the terms and conditions of the existing mortgage.

They are not allowed in certain master planned communities.Summerlin, including Sun City Summerlin▪ Town Center▪ Skye Canyon▪ Cliff’s Edge▪ Symphony Park▪ Grand Canyon Village▪ Las Vegas Medical District▪ Providence SquareAnd these restrictions I find would be the most difficult for you to overcome - A short-term rental license does not provide authority to violate any common-interest community’s covenants,conditions and restrictions (CC&Rs).

Conventional at 5% down would cap you at 3% concessions, but generally is more lenient with employment history and property condition.