But then, as short-term rentals became ever more popular, Americans tourists started thinking wait a second "We're paying so much for staying for a week at that short-term rental.

These are the only units that currently do not pay utilities, which amounts to about $250 per month per unit.

I ended up with the goal of living in the area paying less than what I would pay for rent ($1700) while building equity on a property.

So what exactly did we pay for?

How much is he paying you monthly to use your land?

Taking some of that space for the bedroom would only require framing in a non-load-bearing wall, closet, and bedroom door, plus adding a few electrical outlets/switches, and then finishing with insulation, drywall, paint, and trim. 

The idea would be to sell the lots to pay down on the short term mortgage until the house got fixed entirely.

So, you PAY them EXTRA for that.

Even if its cutting the warranty off, sticking to manufacture warranties, and saving the cash to pay for expenses when they come up.

I recently read in a book that suggested I should open a dual checking and savings account, and take the security deposits from my future tenants and store them in the savings account, then use the checking to pay the mortgage or maintenance fees.