Condos put's a layer of management between you and complete control of your property.  

I could probably rent it for $750-$1000 per month over what the standard monthly costs are right now (not including vacancy, maintenance, management company, etc).

I ended up starting a property management company since most of my clients were investors buying rental properties in Austin, and now I primarily help other investors purchase their investments, and manage them. 

In general, I agree in our market here in Pittsburgh "rent by the room" isn't a very profitable strategy and when we've managed for owners with this strategy it always turns out bad.

I'd try to find a property manager that can help you keep an eye on it and let it appreciate. 

I assume, I will have to open business accounts and use those to manage my business expenses and business earnings etc. 

Partner brings caliptal/down payment (passive involvement) and I do the management (active REPS activity).

Any advice on managing this situation, reducing costs, or navigating the permit process would be greatly appreciated.

For me, it's a great blend of banking, bookkeeping and tenant management software.

The calculation takes more than just Rent and PITI - they consider other expenses like vacancies, management fees, utilities, and more especially for full-doc programs.