TIAErich your best bet would be to amortize it over thirty with a 5 year balloon. the issue with private lenders  vs. banks is private lenders use their money to lend and many times it may not keep up with inflation - so lending for that long does not make sense.

This seems like my best bet at the moment.

Odd's are he already lives there, that's just how these things go.

No, those expenses would be deducted in the years they occurred unless you've made an odd election to capitalize them.  

Also remember the time these returns will take to amend along with the possibility of opening up audit periods/red flags with the IRS due to amendments.Doing this yourself on turbo tax likely won't be your best bet considering all of the details.

If they don't have one, I bet they know somebody.Answering your questions:1.

What are some of the thing’s that you have done to increase your odds of success in real estate? 

Most of the regs prohibit it within the city, so I would check and see if the area you are looking allow it.Your best bet is to look at the markets on VRBO and AirBNB and see what is out there right now.

We opted for option 3 for the safest bet in a stagnating market and tight funds.

I am betting that there aren't that many STRs that offer a setup like that in your area.