Or will the HD lender provide additional funds for construction?

My recommendation if you choose to invest out of state is to choose cities in safe and economically diversified areas with above-average income and population growth.

Very communicative, hands on, and thorough with their property management.As some additional context, I own a few rentals in different markets and Michele's team is top notch compared to them.

Income to Price, Median Income, Median Rent, RTP, Annual Rent to Income, and Unemployment?  

I have a complicated situation in showing proof of income, however, I have a great credit score.

Currently it has 6 rooms ( 5 bed and 1 additional room). common areas are fully furnished and bedrooms are unfurnished.

In addition to this what else can I do to protect myself and ensure that they don't take anything more than is required from that security deposit?

Plus you will owe tax on the additional depreciation you've taken since purchasing it.If you sell that house for more than you purchased it for then you will owe tax on the appreciation. 

If the STR income is on your tax return it is qualified just like long term rent using this form:  https://content.enactmi.com/documents/calculators/Form1038.C...

If I recall, the investor had a high-paying W2 job, lived very modestly, and put a lot of her disposable income into buying and renovating properties for a sustained amount of time.