This could be a tricky transaction with terms and liens in the property.

Not a lot of foreclosure activity because of all the equity gains, but that may change in the coming years with the loans on the mortgages written in the last 1-2 years being much higher (aka normal compared to pre-COVID).

if you have a long-term tenant, the first question is, how long have they lived in the unit?

Short term rentals are not allowed in Volusia County and only in very limited areas of Ormond Beach.  

I feel that I am analyzing deals well in terms of price, downpayment, rents, cashflow, etc...

I've shown a dozen houses to a pre-qualified buyer, only to have them tell me they decided to rent for a couple more years or they are moving to another state. 

Rather, it will be considered earned income... and if you have losses especially the first year with a bunch of start up costs and depreciation... and if your money is at risk (let's assume Yes), then this business venture can offset (or add) to your W-2 income.This is how short-term rental loophole works.

If you are trying to build long-term wealth, you may be more focused on appreciation.

This was more about me being able to use residential eligibility for a long term hold rather than pay rent each month.

There are a few options for that -- a duplex, in which you live in one side and rent the other long-term.