I am looking to understand the ROI on the investment under the two scenarios and how to correctly estimate the differences in total return between the two options, assuming the positive cash flow ($28K/year w 3% growth rate) is reinvested and compared to keeping the $260K in the stock market.

They are two very different strategies. 

Additionally, my brother would responsible for claiming gift tax on the $350,000.My remaindership share is 35% and I will need to claim capital gains on the difference of carryover cost basis.  

I have two units in two different buildings.

Fortunately we had the financial position to be able to "leave them at the alter" and go a different direction, however most consumers may not be as fortunate or prepared.

Worth it IMHO.I agree with @John Underwood that it shouldn't make too much of a difference.You can always charge the guests less and then expense the difference.

Your letter is different if you are targeting long-time absentee owners or homeowners.

The only reason this came to light was I was looking to buy a different primary home and it got me looking at this! 

If there goal is to grow at a rapid pace, then 3rd party is the way to go.

We are running numbers on two different deals right now in Carbondale.