Thank you for your insight @Kristina Kuba - What are the more common financial constraints that would prevent one from obtaining a cash out refi? 

I'm not sure I want to discount any rent because I don't want to set a precedent for rent withholding, but was thinking maybe a $100 gift certificate to a nice restaurant in town makes sense?

@Jeffrey Page did you make obtaining the STR permit a contingency of your deal closing?

Are you clear on what type of financing you are looking to obtain? 

My husband and I are really trying to obtain as much knowledge as we can before diving in .

Reg D Rule 506b does not require sponsors to obtain 3rd party verification of investors' accredited status, which saves some cost & complexity.

Any leads on investor friendly banks/lenders in the Phoenix area to obtain a HELOC?

I would rethink your strategy and possible put cash down on the property and obtain a new mortgage.

The legislature specifically prohibited cities from requiring any kind of permit or permission, so it's not just a fee issue:"The key statutory language now states that local governments may not “require any owner or manager of rental property to obtain any permit or permission under Article 11 or Article 12 . . . to lease or rent residential real property or to register rental property with the local government.”I know Shannon (not real well, she just started over here) and I know she came from Asheville planning so I'm sure their zoning might look similar. 

An area like this provides for great cash on cash returns, as well as stable appreciation that you may not be able to obtain in more saturated markets.