We were exploring taking out a primary mortgage on their home to take out 350k in cash at about a 6% interest rate, and I take out a loan from them at an equal rate or slightly higher (maybe 6.5%).

I'm currently doing 3 month trial leases and if they feel it's a good fit, they can extend to a longer term lease or do a month to month and a higher rate.

With interest rates, home prices, and rent prices in my market to hit that goal of $500 per month I am looking at purchasing a house around $200K, putting down $100K, and renting it out for around $1,500 per month. 

Condotels are more difficult to get financed and typically come with higher interest rates. 

One has a 10.25% rate and I don't plan to sell for awhile. 

You can list your MTR on Furnished Finder or Zillow as a 30 day+ stay, and see if the monthly rate drives demand in your market.

We went back to the appraiser for re-evaluation and they even exceeded the appraised rent rates we needed ($8500/month).

I work for an automotive shop and get paid flat rate so my pay fluctuates.

Back in 2015/2016 you could find a 8% cap rate then in 2017/2018 it was a 7% and 2019/2020 it was 6% and the only reason it has been steady is because rents have seen increases along with pricesSo I tell my clients they have a few options:Buy now on cap rate and refi when rates go down. 

The ARV for the property or the rental rates once done if you plan to keep the property.