Does the down payment and income requirements make it difficult for first time or low income buyers?   

After expressing my shock at the sale, I received some wisdom from our broker who was a second generation real estate guy.

The tax deduction is limited to 30% of your adjusted gross income.

Each room will be rented separately.How will lenders determine net income for calculating DSCR (ratio)?

This regulation allows property owners to build ADUs on their existing residential lots without the need for additional zoning approvals, which can significantly increase property value and rental income. 

Based on the rental estimates, we would net about $700 a month in surplus income since our mortgage is pretty inexpensive.I'm looking to get any and all opinions as I want to make the correct choice for us and also want to make sure I don't screw anything up if we do decide to choose option 2. 

I show them how to add some value for higher income, or partition off, or finish, or split off some land, etc. in order to bring in more dollars or reduce debt.

As long as the rental income covers your rehab and financing costs, you're good to go!

AirDna seems to be the goto place for rather accurate data.My STR on Dauphin Island generates about 50k yearly. 

Larger investors (20+ rentals, multiple partnerships, starting syndications, foreign income) can definitely benefit from larger CPA firms with a higher price tag.