It has a high demand from college students because Fairfield University is very close and so is Sacred Heart. 

If you can get a 4 unit and a basement, that would be ideal and create major cash flow and equity creation, plus you can not worry about a property manager and boost your yield.Also, you don't get the tax benefits when you rent ($250k capital gains exemption if single, $500k if married). 

They just want to make sure you are legit and your contract is fair.I suggest you have your attorney call hers to help boost your credibility.

After a couple of phone conversations and a heart to heart, we were able to come to an agreement.

Only you have your best interest at heart. 

For the heat, I like to have a thermostat kind of hidden and locked at set temp such as 68 degrees, and have baseboard electric heaters in the units that way the tenants can "boost" the heat all they want on their own dime.

Curious how you think about future appreciation in STR dominant markets ... where homes are essentially being valued as income producing hospitality assets rather than homes ...i'm new to this - so please let me know if i'm thinking about this the right way - but it seems like in an STR dominant market appreciation would be driven by 3 things:1) increased demand from Airbnb consumers (essentially boosts NOI through higher occupancy/ ADRs, and therefore boosts market value of homes if you hold cap rates constant)2) increased demand from Airbnb investors willing to pay more for the same earnings (i.e., lower cap rates)3) inflationAm I thinking about this the right way?

for small multi and SFH - you add value and boost ARV. 

I'm not sure if rehab "has to" be completed before you apply for DF, but it's usually in your best interest because it will boost the appraised value which is obviously desirable (see #3).

Yes, in a heart beat.