Even if I raise it from $600 to just under $1200 in the span of a month the tenants have no where to go because I will still have the cheapest rent in a 5 mile radius.Though, I don't want to be too harsh as I have been in their shoes before, I will work with them on the rent raises.  

If I was in your shoes, I wouldnt waste my time with an unqualified buyer.

In addition to comfort and confidence to manage close by and local knowledge.

If I were in your shoes and you wanted to keep them on MTM I would have them still sign a MTM lease and make the one resident pay a deposit, assuming you can sign new MTM leases in your area.I personally would still probably shift them to longer-term leases anyway, but it's not a bad idea to feel them out for a few months.

You'll have to find your comfort level on how you want to manage it.  

The more comfortable you have to live, the worst the numbers will be. 

A lot of these southern beach & mountain towns have been supporting STR for 75+ years, long before Airbnb was a thing, so they’re very comfortable with it and it’s a built-in part of the community.A lot of Northern places are FREAKING OUT over STRs & STR regulations & they don’t seem to be very supportive of it.

My target purchase price is no more than $410K, aiming for an ARV in the $530K to $570K range.I'm comfortable with small to medium-sized renovations that don't require major structural changes or additional square footage.

It's all about what your comfortable with @Joe P.As @Todd Dexheimer mentions, get on a few more lists, research the sponsors you are interested in that meet your criteria. 

. - Are you okay pushing more and having to re-lease the unit, or would you strongly prefer not to have to do that and give up more on cash flow- What do you personally feel comfortable increasing the rent for?