It is my primary method of investing.If structured and closed correctly, they work. 

But look at the commercial structures, there masonry are they not. 

From the top of my head - mildew, moisture buildup, dust, structural cracks...

In general, if you have a typical condo unit the HOA insurance covers the exterior structure while your insurance covers the "studs in."5.

Now those are forbidden here and code calls for 16D common or those structural hex screws you mention.

@Reeti PeshawariaIf it's a desirable place to be you can STR within structure of the current rules.

Here's a revised response with a more structured format:---Hey JeffIt sounds like you’ve got a solid deal in the works, but I totally understand your concerns about the 5-year seller carry.

Have you tried different late fee structures or flex rent (allow tenants to pay weekly or biweekly instead of monthly)?

This amounts to lost opportunity because if you had purchased RE, at the closing it can start producing return. 5) ADUs detract from the existing structure whether this is privacy, a garage, or just yard space. 6) this is related to number 1, but there are many more buyers looking to purchase homes for their family than there are RE investors looking to purchase small unit count properties.

The issue I have seen with these types of properties is they could have two valuations - the value of the real estate which the structures will have little value and you have the land the other is as an operating business just like a bed and breakfast would have - real estate has value but it operates a business now you mention 12k / month but if someone also has to manage the property what is that worth and what would someone pay to manage a property like this?