@Travon Allender  As mentioned, if a bank will lend on a property in need of rehabbing, they will typically be a less costly resource (but not all banks are comfortable lending on non-cash flowing assets).

Although it’s 10 bedrooms now it could, with a little effort be turned into a very comfortable 4 bedroom 4 bath house.

And the replacement property must also be purchased with the intent of holding for productive use.Most folks feel comfortable with anything more than a year but there could always be situations where a hold period of less than (or more than) a year are needed to demonstrate your intent.On the plus side for you would be1. it appears you frequently hold property (the 2010 purchase) for longer term.  2.

@Lane OttoI’m thinking AirBnB would be the best way, if she’s comfortable with it.I know a couple empty nesters who have utilized that extra space for AirBnB income.

I talked to my CPA and he said that it wouldn't be advisable to have a lease agreement, but a living agreement of house rules he feels comfortable with. 

Itll come in handy if you ever feel more serious about the child's well being and living environment

When I meet local buyers (which I'm doing ALL of the time at local REI meetups), I ask them what types of property they're looking for, where they want them, what condition they're comfortable with, and what price range. 

If that’s the case, decide how many units you are comfortable managing with your schedule and consider how you will meet any needs they may have (such as midnight property emergencies like heat going out, plumbing leaks, etc), and find some maintenance and repair people that you trust to handle the big things you cannot do yourself.

The other option is also good however as young investors I would start where your comfortable, accomplish that and then consider expanding geographically. 

Never want to win so badly that you will forego your future by waiving things you are not comfortable with or experienced enough to waive.