The cost of entry is low, and cash flow is high.

Also, are there other things I may not be taking into account, other than "quality of life" issues?

Prices are also area specific , if you live in an area with a high cost of living , you will pay more . 

Some people doing this strategy will rent STR in seasonal markets when there's high demand and high turnover and then pivot to midterm during the off season.

:Class A Properties:Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Vacancy Est: Historically 10%, 5% the more recent norm.Tenant Pool: Majority will have FICO scores of 680+, zero evictions in last 7 years.Class B Properties:Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.Tenant Pool: Majority will have FICO scores of 620-680, some blemishes, but should have no evictions in last 5 yearsClass C Properties:Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation.

Buying real estate is highly emotional.

Many of the other nearby homes are larger, so I thought the demand would be high for a furnished 2BD. 

It’s very hands on for most owners (high turnover employees  and employees stealing bc of cash sales) so as long as that’s something you’re willing to do it’s likely a great option for you. 

And if the Fed continues to keep rates this high they won't be able to make their returns and you could see real problems in the retirement sector. 

That isn't enough equity to move the needle now and since you are on a 5.75% FHA, your payments are probably still pretty high comparatively which might cut the ability to save more.