There is plenty of potential to increase the occupancy both during peak season and also by remaining open the remainder of the year (currently it is only open Apr to Oct) and the property and it's online reputation are in pristine condition!  

We have done all the work on the house ourself with the help of a general contractor who is a friend of ours and made sure it was done above current building standards.Also I had a pre listing inspection done and addressed the majority of the few things that were wrong.

I wanted to find out if I was getting ripped off or if this is a legitimate and reasonable APR. 

I had a pre-approved buyer for my fix and flip.

We offer the private lender 10%  APR on their money while it is invested.

I've applied for a pre approval at my credit union but will not hear back until after the holiday.I'm considering a SFH but I'm concerned with the condition of many of the more affordable homes in my area.

I already sent my agent a pre-qualification letter with the balance of the funds available in my account.  

The effective APR including all that PMI is 6.7% for FHA on anything over 80% with a 4.5% base interest rate.

Should I go ahead and get a pre-approval now while I'm ahead?

I am sure someone has used this strategy, but I would think tough to make much money doing it.I think this strategy is mostly for people who own a vacation home and hope to reduce the costs.So they can stay for the holidays in a vacantion destination...Hawaii, Ski Resorts, Florida...and then rent out the shoulder seasons to cut the costs...not specifically to make money.There could be a few exceptions to this like San Francisco and New York were cost of entry is very high, but some people seem to have been successful turning old rentals into AirBnB type accommodations that would generate much higher revenue.There are issues with these as well where both the governments and often neighbors are not thrilled about turning their mostly owner/occupied condos into short term rentals.The main short term rental locations I know about in NC are at the beaches...but you have to figure out if the season is long enough or profitable enough to cover the rest of the year.