On a side note, you should be issuing "Pay or 'Quit" notice as soon as you can and quit being a "nice guy".

I came to the conclusion that a cash out refi was the way to go even though it won't cash flow great afterwards (it'll still be positive about $200/month).

It will be a royal PITA to do a one-night stay on a random Wednesday, but it could be done.3) It's currently listed as pet-friendly with only a $30 pet fee.

TN markets are still pretty free market so even if you do get cancelled there will be alternatives.

But even then, seller financing is rarely substantially better than another investment they could make (including trust deed lending, which will often be at a higher rate than seller financing)In my experience, the owners who find owner financing advantageous are at the ends of their careers and are not interested in looking for another investment (other than the usual retirement funding sorts.)

This will be a gateway question.

These areas attract long-term tenants who are willing to pay for quality housing​​.Mixed-Use Properties:Properties that combine residential and commercial spaces offer diversified income streams.

@Dan Wang FWIW - In the 1031 space we see very few investors who make the switch from "active" commercial investing to "active" residential investing. 

Sure you’ll be taxed on it.

There will be fluctuations on rents and much of it is property and timing dependent and not necessarily market dependent.