Financial goals: Our current jobs provide for high-income but not a lot of time for active real-estate investing, so our strategy is long-term buy-and-hold with less headache properties.

Sharma,Just a few things on the surface the deal looks great in terms of gained equity for the price plus injected costs to renovate/repair.

This positive cash flow will provide a financial buffer and support your long-term investment goals.Multi-family (MFH) and single-family homes (SFH) are distinct asset classes with different characteristics.

Suing someone is not a guarantee of success.

Have your terms together on what type of return youre looking to get.....I would pitch this at a REIA meetup and funds....

You are better off getting a Principal and Interest loan since you would be in the low to mid 7s at that PPP term.

This is the ONLY place where the terms PORTION and SPACE are not used in reference to the business or rental usage, but I'm thinking this ultimately has to do with depreciation recapture only and not overall capital gains.Worksheet 3 shows that "Business or Rental Use of Home" is splitting up "Business" and "Home" versions of your gain/loss worksheet, further proving the point. 

Quote from @Diana Mulvihill: I think "soaking tub" is a more accurate term.

Be sure to check local regulations regarding short-term rentals as well.

If you give them a shorter term lease, do it at a higher rent as you are going to be inconvenienced trying to find a new tenant at what may be a hard time of year.