However, the community this is located in is unable to allow short term rentals, so it will continue to be a buy and hold property for long term rentals.

It is tough to find something in the right area (where STRs are allowed) that isn't a budget buster.

A roof is a special class of property under 179 allowing you to take it (assuming you meet the trade or business requirement). 

Not to mention the GL is usually only about 15% of your overall insurance cost.I'd suggest asking your lender to put into writing what is the maximum risk they will allow you to take and then give those guidelines to your broker and see if they can improve on your current program.

I am helping the buyer buy allowing him to buy it and not listing it on the MLS.

There are loans that allow you to use projected short term rental income to qualify as well.

This can allow them the cash if needed for the new purchase in the Midwest.

It allows you to buy a property with a smaller down payment since you'll be living in it as your primary residence.

This allows the option of holding the properties until selling makes the most sense for me. 

There are currently only two areas that allow STRs.