Meanwhile, I created one LLC and business bank account to pay property tax, mortgage and day-to-day operating cost.

Usually MTR comes fully furnished with utilities included, so you pay for the convenience.if the area has traveling nurses, other professionals that come for a few months for work they normally pay more, in certain cases the employer pays the rent not familiar with that particular market,  but worth looking into it.

That is what we thought, but are being told we have to pay SS and medicare on this now even though it is "deferred." 

I'd recommend looking at costs. your build cost is going to be well over other homes because of the fixed costs like slab, Hvac, roof, etc. check the market drivers and weight the benefits of short term versus long term. long term is no furniture and help pays mortgage but at this size it doesn't really cover everything. we didn't find a lot of economies of scale in single family detached. can you build more than one unit?

I recommend you start with duplexes as you should always have a paying tenant.

Keep in mind if you buy another primary residence, you'd have better rates, terms and can pay as little as 5% down for multi family up to 4 units.

As of today they stopped paying the interest.

Went on to purchase additional rentals so tenants can pay down the loan and I build equity How did you find this deal and how did you negotiate it?

For example, I mention that every adult must pay a $30 application fee, pass my credit/criminal background, make a combined income of 3x the rent, and whether or not the property accepts pets.

The unit is part of a condo association for which we pay fees.