Long term appreciation is definitely part of the equation.

Emotion, happiness, and lower stress levels are part of the equation and decision making process as well.

I equate this more to my Maltese yapping like crazy at my Bernese Mountain dog every time he comes within 10 feet of their food. 

So basically, if a property was first a primary residency before turning it into a rental, than the "nonqualifying use" equation does not apply? 

At that point, it will be added to the property's basis; until then, it sits on your books.Advertising the new rental for rent is only one part of the equation.

This equates to an amount significantly below market value rent. 

Quote from @Scott Mac:I wonder if 12% will be enough to weather the storm.I don't know enough about the properties to answer that question, but note that the original borrower had an 80% LTV loan, so the 12% discount off the original loan amount equates to about 30% off the original purchase price.Values in Houston have dropped about 20-25% since the purchase, so if this is simply a result of bad operations, the new buyers may have gotten a decent deal. 

I also understand the realtor side of the equation too. 

For a $800k home in Sedona that equates to approximately $112k-$120k gross annual revenue.

I'd imagine the price per door could be equated to the price per bedroom in some hotter SFH areas.