Are there other legal or financial consequences I should be aware of?

Hiring a PM can save you time and headaches by handling tenants, maintenance, and legal stuff.

Owner ended up settling with the tenant, but then we had to threaten to sue our own client to get them to pay our legal fees.- Owner must sign a Hold Harmless to indemnify us against any potential tenant lawsuits relating to the work their contractor is doing.--- Another lawsuit resulted from owner's contractor taking down basement handrail to get supplies down the steps, then they didn't put it back and tenant fell down the stairs.- We also negotiate a reasonable completion date, depending on the Scope Of Work (SOW). --- Who gets all the phone calls and wastes time calming a tenant down because the owner's contractor doesn't show up as scheduled after they took time off from work or a 3 day job takes 3 weeks?

The challenge we're facing is the lack of short term rental data for the appraiser, and we won't know if it will meet the debt service coverage ratio (DSCR) requirements until the appraisal is complete.Has anyone dealt with a similar situation?

if his income is strong enough and not as much debt, he should be OKHope that helps..

and, something that doesn't get discussed enough - a record number of properties don't have any debts on them. 

I won't be able to make the cottage legal rental without living in the primary home myself.

You would only pay taxes on all passive investments in a traditional SDIRA at distribution, unless you have a mortgage, then the portion of the income derived because of the mortgage will be subject to UDFI (unrelated debt finance income) which will trigger UBIT (unrelated business income tax). 

There are some legal considerations as well as practical considerations 1.  

Key Check gave me credit and debt load, which was surprising, as most other methods people don't share.