While it is a legal 2 unit, it needs at least 15-20k of work to get it there.Are we making a mistake putting our aesthetic and character desires in the way?

I'm not saying that is the case, you'd need to check in your area to find out.It seems to me as if we are somewhat "debating" the validity of utilizing an entity, but not really understanding what the goal you desire is from that entity.

So the units are larger than most 1 and 2 bdrm apartments available in the area and it's in a desirable area to live.

You always have the option of paying more monthly to pay down the loan if you desire but at least your interest rate will remain fixed unlike an ARM which will eventually change.

Screening for more desirable tenants Vs.

-Base your desired cap rate on other comparible properties, size and location.I got an SBA loan for mine and had to put 20% down.

So happy to have found you, BiggerPockets, as my learning platform.I desire to add value as I learn from you guys.

It may not be a restricted development, for small yards to be desired.

I just don't want to negatively affect our ability to get the loan amount we desire for our primary residence.

Outside of biking distance is much less expensive but desirability and rents drop way off. 0.25 miles (walking distance) - 2 miles (biking distance) tends to be the sweet spot, at least IMO and for my market.Good point made about flood insurance too, and that is NOT optional if you have a mortgage and rates are NOT negotiable, but set for the market ... become familiar with the map of flood zones ... if you can get just outside of the flood zone (depending on elevation as well as ocean proximity) and still in the sweet spot, then that'd be double sweet.As for hiring a realtor to fill it, manage it, and charge you a % ... depends on the realtor, depends on the %, and depends on your goals, availability, and willingness to self manage, but in a vast majority of cases, especially with a vacation type rental, it will most likely be in your best interest to self manage, at least in the beginning if you only have 1 property and little experience.