If done right and the area supports that type of living accommodation (permitted and acceptance), it can work but most people will see it as a converted garage (hence the done right part) and rentability will be impacted.We have looked at doing that on a few properties or building and ADU to boost cash flow but the numbers did not work so we passed and found something else. 

I will accommodate a complimentary hour for late check-out if it's not a back-to-back otherwise I'll charge $50-$100/hour up until 4pm...We have quite a few guests take us up on it. 

In my opinion, one of the great things about STR is that there is a wide range of accommodations, in a wide geographical area, with differences in property condition, size, location, cleanliness, amenities, etc.  85% of motels/hotels are basically the same, the major differences in many of the lodgings newly built seem to be the number of bars of soap offered in the bathrooms, and whether the property is served by two elevators or three.  

Almost no one does and they are very accommodating to the people who care enough to go to the office, though it is more than 5 minutes.Expect to appeal every single triennial assessment for as long as you own the property, so it's worth it to learn.

For older demographics, consider the availability of medical centers, entertainment, and restaurants.Buildings/Permits: Assess the city's growth compared to previous years.Determine if the city can accommodate future supply.Government Regulations: Examine the city's efforts and the type of businesses they are targeting.

However, one of the bedrooms is quite small to accommodate two beds.I have some concerns regarding code compliance, as it seems there may be too many people staying in the property, and the rooms may not be suitable for that many children per bedroom.What should I do in this circumstance?

Multi-family conversion to vacation rental has always appealed to me, as you can accommodate large groups, or small ones, by being flexible with how your group the units together.

Will the seller simply give you an extension to accommodate your LLC getting set up?

regardless of what the market is doing, you should choose a RE strategy that works with your personal skill set, available capital, amount of free time, and risk tolerance. then, make that strategy work in any 'market.' for example, a lot of people would not want to flip right now, because they worry home values are going to go DOWN soon. but people who excel at flipping are just buying their properties at bigger discounts to accommodate that possibility. if you try to pick a strategy based on current market conditions, you'll never get started, because the market conditions are ever-changing. hope this helps!

I'm doing to to keep my options open.... its not the tenant asking for some accommodation.