Link to article about Falls Event center founder that recently went under & is facing major legal issues.

I'm not sure if you're aware but STRs are not legal in JC unless you the owner live in the building 

But for large multi-family, that amount hardly covers your legal fees for one transaction, let alone down payment, due diligence costs, lender fees, other closing costs, etc.

- is it legal to rent by the room in your area?

Seems like the township did not deemed the property a legal for unit property.

As used in this Section 18, "Interest in the Property" means any legal or beneficial interest in the Property, including, but not limited to, those beneficial intereststransferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent of which is the transfer of title by Borrower at a future date to purchaser.If all or any part of the Property or any Interest in the Property is sold or transferred

The tenants in the 3 bedroom rental aren't in a protected class but I do not want to get in any kind of legal bind. 

However, there are small parts of "Clearwater" that are unincorporated and therefore legal for 1 night stays, opening the door for successful operations. 

I've also heard it can be a good thing to have some debt against a property because if any issues arise legally, the bank will be the first line of defense. 

By understanding a banks lending guidelines really well, I've figured out legal ways around them.