David Bitton, Other than the marketing issue for the STR is there anything else about our use case that I should be concerned with? 

Hey Mike, I believe this was actually bp support, I had an issue trying to reply to one particular forum and sent them a note.

Any issues you encounter in the beginning time will work out for you.

However, we're having doubts because: 1. we wouldn't be able to afford the PITI on our own for longer for >6 months without the help of rents, so we're depending on the house hack to be able to afford this house, but not sure if that's a bad thing or not and 2. not sure if this house is too much house for us financially and we're in over our heads about what we can afford.We've been super excited about this place until we realized the issue with the illegal basement and now we're overwhelmed with the thought of potentially not even moving forward with the house.

It really doesn't seem like a big deal but I have never used one of these systems myself and don't know if there may be future problems with leaking or water pressure/flow issues.

What are some common structural issues that home owners encounter in Santa Fe?

Frankly - this space has become extremely saturated over the last 10 years - so the odds that you find this one "diamond in the rough" deal is relatively low all things considered. 

:Class A Properties:Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Vacancy Est: Historically 10%, 5% the more recent norm.Tenant Pool: Majority will have FICO scores of 680+, zero evictions in last 7 years.Class B Properties:Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.Tenant Pool: Majority will have FICO scores of 620-680, some blemishes, but should have no evictions in last 5 yearsClass C Properties:Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation.

Borrow the money from a relative and pay them interest.

The other issue aside from the giant hassle is now that the payment is higher I'm less likely to cash flow and will be at slightly  higher risk of default.