To me interest rate is just another expense like insurance and tax.

Your projected pro forma will use your updated costs (such as increases in property insurance and taxes, upcoming repairs) and income (increased rents or added income streams).

I understand for tax purposes that I can only take two-thirds of the expenses related to the house to offset the rental income.

For example, I have been informed from a couple of banks that even though my current Airbnb totally offsets the mortgage, they will not take the income from the property towards the DTI calculations but rather take the gross income from the Taxes filed and consider the mortgage amount as an expense, which was hard to understand.

Any construction will come with LOTS of permits.I don't know SLT market, it's CA and im in NV, but I've helped more than one person sell in Incline and buy in Reno because the numbers work better for them.I suggest you look into property taxes, and tenant protections of NV vs CA. 

I mean, even if she's upset- she could come back and ask to negotiate or talk about it instead of ghosting--My taxes were raised adding an extra 200 per month.

Delinquent Taxes or Loan in Default3.

For tax purposes, having LLC hold the title would be the ideal scenario.

In July I will be receiving $50k after taxes in an inheritance for investing. 

But let's not forget the importance of cash flow, and the impact of federal state and local taxes on our assets and cash flow also.