If this is your primary residence and you have an extra bedroom (or can make an extra bedroom), AirBnb can be very lucrative. 

My suggestions:* Requiring code compliance and safety equipment is absolutely valid and should be part of the regulations* Requiring owners live within 15 miles is not necessary since poor hosts whether they're local or distant will violate the 3-5 warning system and earn a suspension.

Or add an extra garage.  

Just looking at Zillow I’m having a hard time making the numbers work between prop taxes, insurance, management on 20% Down vs cash currently earning 5% (albeit that 5% going away soon with rate cuts)  To be completely honest, there's not much right now that will give you decent cashflow without getting into a full rehab.

Relatively small amounts of interest income ($1600+ per year) is the highest taxed form of income I have found if you have kids at home.After earning a few grand in interest, It takes away my child tax credits and gives me an effective tax rate of 70%.   

Can you invest that money that would be used to pay it off in places that earn more than 7%? 

He is  content to earn income solely through a W-2.

I get the purpose, I understand how it can help some newer folks earn extra side money, BUT I feel like there should be way more discussion on how to protect the lender, how much time it will take, what all is involved, nuances, hurdles etc and discuss those more. 

So, by transferring income from a rental schedule E to a business schedule C you're creating a significant extra tax.

Use the ge benefits that you have earned to their fullest.