@Ju Hyun Kim I would be surprised if a bathroom door was rotten.

A “pass-down” lease refers to the current tenant essentially signing over their lease to the next tenant, and if your property is in-demand, encouraging this can limit vacancies and create student appeal.Consider demand when determining rent prices.The beauty of real estate investment in a college town is stability in rental prices.

We are also in the process of selling and moving to a larger home so they are essentially covering our mortgage while we travel.My question is, since our house has appreciated $170k since we purchased it 5 years ago, do we lose the capital gains exclusion if we rent it to them for a few months in the interim.

You have to deal with changing the bedsheets, towels and leave pooper paper and sundries in the bathroom.

Plumbing is already roughed in but there will be a lot of structural work needed to lower the floor and redo the kitchen and bathroom.

Essentially like a 25% down type of loan concept.  

The property has essentially been "grandfathered in" (hence the LEGAL, non-conforming), but if it ever needed to be rebuilt (in the event of a fire/total loss), it could only be rebuilt as a single-family. 

Essentially all the revenue stream that it generates will not be considered for the mortgage most likely.

It's basic, not kitchen/bathroom upgraded, but it's in a beautiful family area in South OC. 

On a side note, I just learned you can use a high equity single family home as a down payment to purchase a multi-family home.In 2021, I learned about commercial multifamily and realized with just 1 deal, I can essentially leave my W-2 job.