You are bleeding money now, but each year it might actually get worse depending on the financials. 

We own our house in Seattle and are trying to determine the best strategy for our move - what approach would net us the most money over the next 1-3 years.

In those days it was possible to locate and tie up a “killer” deal, and close the transaction with absolutely zero of the investors own money.

We are considering stepping in and trying to buy the place, but looking for some guidance on STR and what kind of money this place can bring in. 

one thing is your lending your money way under what private money should charge. unless your just doing your friends a favor..

This is the scenario:I buy a fixer with some hard-money.

Also, after a year, the mortgage hasn't been paid down by much, especially if it's a 30 year mortgage.The only challenge you may run into is if you purchased it using a low or no money down mortgage option like FHA or VA lending.

Over the years every single time I went over his house to hang out we would talk about money, investing and the future we were building.

There is almost no scenario where a condo would ever positive cash flow while servicing debt, and very little positive cash flow with no debt.If your budget only allows for a condo, find a better place to put your money to work.   

I am interested in working with MB capital in getting unsecured line of credit and possibly hard money lending.