I am interested in exploring renting it out long or medium term.

A neighbor 2 doors down also cited had added a staircase between his first-floor apartment to the basement apartment legalized and with the crazy rents in the area, collected rents now legally for both.

Another option is rental arbitrage, where someone trustworthy rents from you and handles it as an STR, paying you a fixed monthly rent.In the end, it depends on what you’re comfortable with and your financial goals.

Mortgage is around $3500/$3600 (with modification), and has little to no equity...rents in the area are around $3100.

List price, what you have into it, appraised value, potential rent?

When you can buy properties like this, you can get almost 100% of your money out of the property, convert the property into a long term rental loan, with a DSCR Loan (Debt Service Coverage Ratio) where we as the lender look at the property and if it cash flows, and that is expressed as a ratio, for instance if your Total Loan payment including Principal, Interest, Taxes and Insurance was $1000/mo, then you would need a rent of $1200/mo and you would have a 1.2 DSCR Ratio.Here is an example of a cheap duplex https://www.zillow.com/homedetails/732-Broad-St-Menasha-WI-5...

If you do decide to purchase a primary, a multi-unit property could be a solution in terms of receiving cash flow on the other rented out units. 

Do they qualify for a DSCR loan with estimated market rents (use long term average rents, not suped up STR or MTR rental income to be safe).

We rented a home to three adult brothers just over a year ago and just signed the lease renewal. 

However, if they do, they are likely just 'okay' with it and would likely leverage the 10-07 market rent analysis on the appraisal to actually calculate and determine the official DSCR during Underwriting.Hope that helps, if you do have a tenant who is willing to be flexible, the 12 month is always the safest bet.