However from my observations the squatter occupied properties tend to be in lower barrier markets and I wouldn't personally want to spend my time and effort trying to create value in such neighborhoods.

Based on the income of the property no your personal income. 

If you fail to follow the rules, you may open your personal assets to a lawsuit.

I'd personally wouldn't refi it.

You will also gain valuable experience that you can leverage for other opportunities.Speaking from personal experience, I have several STR rentals in California (I co-own STRental Pros in Orange County, Los Angeles County, and Riverside County).

I personally know the seller.

In return, try to bring value to this person.

Personally I will not work with them specifically due to this fee.

A reserve is unnecessary, but I still keep around $15,000 - $20,000 in my account.The point is, that you should sit down and assess your finances to determine what the worst-case scenario may look like, how much you would need to cover it without impacting your life, and whether you will need to build a reserve.

They are claiming it was just over a year old when I moved in and are prorating based on a 7 year carpet life.