For all of the additional work involved, I'd be hesitant to do a STR deal at 10-15% but of course it depends on what your goals are for the property and for your finances. 

Should I be doing anything additional knowing he is running a business out of my house?  

He backed off.My insurance agent advised me in the future to have myself named as an additional insured on the renter's policy so I will be notified when the policy got cancelled.

You may have other non-financial costs associated with this type of property that compensate for the greater cash flow (e.g. additional risk, needy tenants, tenants whose priorities do not leave room for taking care of your property, etc.). 

I've been in Real Estate since '87 so I like to invest in what I know but outside of my company, in my personal portfolio I have about 20% outside of Real Estate assets in other types of debt instruments, private equity, and a bit in the traditional stock market. 

This cost of debt comes through where people have to borrow to afford the item, like a car, or business Capex and of course, a home.

I recently reviewed a buyer's agreement which stated 3% on gross selling price, plus $695 flat fee in addition to percentage, for services provided. 

You can simply let your new property sit and make money debt free until you have the need for the cash. 

For example, I am a little concerned about some aspects of the business cycle recovery and a potential for a double-dip so I lean toward the safest part of capital stack which is debt (or low-debt equity).

Many lenders will charge additional rate increase if loan is under $150K.