Rental income are never subject to SE tax no matter how you run it through.

Things like evictions or rent increases are very sensitive subjects.

The rent from the 3 rooms more than covers my mortgage and utilities. 

If you're going to take this risk, make sure it at least cash flows so that you cover any expenses that come up along the way.

As far as 10% interest and 3 points vs 13% interest is concerned, covering their bases, TVM, etc.2.

The lender will need to ensure your net operating expenses can cover the debt and they can't establish that without solid financials.  

Enough to cover you for a complete loss and potentially getting sued for numerous reasons.  

@Benjamin Black I think you can find a Kender that can do 80% LTV which should cover consolidation and also closing costs.

Flipping homes that rises to the level of a trade or business is subject to ordinary income tax rates, and the flipped homes are treated as inventory, so that portion of your business can be considered a "dealer".Rental real estate is not, however.

Just cover yourself for the issue and know what it costs to fix.