Some experts say as many as 5.5 million homes short. 

Why is the seller sitting on a vacancy for an entire year when the rental market appears strong?

Fully aware that we would be at the mercy of the appraisal but trying to think of ways to be competitive to a seller when multiple offers are expected.

Like, how can I read that as anything other than direct intent to fool the seller into thinking that you have proof of funds? 

(Not easy to do without experience I know) but that's where education comes into play.Finding motivated sellers, being able to communicate effectively, problem solving, understanding of market values, and an understanding of rehab cost.

In short, I write down the total amount that was paid to perform the project. 

This could be ugly for people who own STR's in Hawaii.https://www.sfgate.com/hawaii/article/hawaii-short-term-rental-vacation-bill-19382321.php

Based on the 14-day rule, I don't need to file any profit from my short term rental.

The California Association of Real Estate purchase & sale agreement has a "subject to" section.The most important issues are to proper disclosures to your seller so they understand the pro's & cons of entering into this type of agreement.

Properties losing value short term is way less of a risk than making monthly expenses when holding long term.