It's been rezoned to allow a live/work component, allows 4 units, and the FAR allows room for plenty of additional SF. 

Additionally, I am aware that once I move out, I can list the home on VRBO and several other platforms to help boost bookings.The reason why I'm considering/leaning toward selling the house, is that when I begin to run the numbers, the expenses exceed what I could potentially make.

Not saying it can't work... just requires additional caution.  

I’m in no rush to move once I get into something, especially if it makes more sense to stay out for an additional year or so.

I understand that passive losses cannot reduce your taxable income and must be rolled over to be subtracted from future passive income, UNLESS you meet the special allowance that says you may deduct up to $25k in passive losses from taxable income if your modified AGI is less than $100k that year.

As OP said, hard to find umbrella that will cover STR papered insurance unless I find a carrier that writes it under my name personally and names the LLC as an additional insured (I own my properties under LLCs).  

Aim to purchase and renovate a property for resale, with the ultimate goal of acquiring additional income-generating rentals.

Additionally, so far the economy has shown pretty strong resilience, with historically low unemployment rates.

Regarding Jonathan's point, it's crucial to evaluate the cost of these additions and calculate how long it will take to recover that investment.I'm a bit unclear about your living arrangements.

I think the stats way back to 40's have the majority of the paint manufactures using lead as an additive.