However, I am wary of the maintenance cost and added liability that comes with these amenities. 

Are the costs for pre fab better in your area than a new construction?

The cost of living is extremely low compared to other cities and you can still many many positive cash flowing and 1% deals here.

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years.

You will need to work with a tax professional to analyze your current tax situation (income, deductions, activities, etc.) as well as projected income from the fix and flip business.The benefits have to outweigh the costs (payroll costs, additional tax returns, more stringent reporting and compliance requirements, etc.).One important note - an S Corp is not an entity; it is a tax election.

We are looking towards STRs in order to lower our W-2 taxable income via cost seg and bonus depreciation.I believe my line of work qualifies me as a REP, but what I am not clear on is whether I would still need to meet the 'material participation' requirements in our rental business in order for our losses to be non-passive.

I think, generally speaking, this is one of the bigger reasons NOT to build an ADU in your backyard simply because you have the space: there aren't really any simple ways to finance the building costs. 

Hi All,Interested in purchasing a STR this year, meet material participation rules/100 hrs, obtain cost seg and bonus depreciation.

Add a deduct for estimated repairs on the closing document and you take care of the repairs.  

When done well, giving a cash incentive to leave voluntarily will still cost you some money, but it may be faster, easier and may avoid property damage repair costs that sometimes are incurred when circumstances result in apathetic or hostile tenants.