I just recently sold an investment property that i originally lived in. 

The problem you are likely running into is the Log Cabin part of it - at the end of the day, DSCR Loans are really still intended for properties that are generally usable for full-time owner-occupancy year-round living if needed - so true log cabins are pretty much outside of anyone's box.However, its definitely a grey area on what differentiates a "Log Cabin" from a "Cabin-Style" home. 

The main items in our renovation are:New water main from curb and valveNew electric service and panelAdd bathroom + convert to full bathLVP in 70% of the houseInterior PaintingAdditional bedrooms in basementKitchenette in basementEgress(x2) in basementOur scope of work should create a great living space for us to grow into, but also provide a rental unit that competes (or even exceeds) the area offerings for medium term rentals.

Here’s the situation, we’ve rented here for 12 years from an old lady that lives an hour away.

Though you still owe depreciation recapture.)This is because our “investing forefathers” used to move in to properties that were rentals for 18 years, live in them for 2 years and take ALL the gain tax free.

I went with Indianapolis area because I used to live there (moved back to CA, don't like winters) so I knew the market.

Your profile mentions doing a 'live-in-flip'.You would want to work with a CPA that is knowledgeable of real estate and also has a good understanding of section 121 which allows you to exclude some gain from the sale of a personal residence.

I have some family in Fairfield I'm originally from Davis now living in Tahoe.

Hi,I have a house in Denver that I have owned and lived in for the last 27+ of 30 years.

If that property you purchase has negative equity, are you ok with living there for a longer period of time?