Thank you for the replies.
monarda: We are paying cash for all of the improvements, which is part of the reason vacancy doesn't terrify us. Other investments... that could be the face punch. I have been sitting on what to me is a "mountain" of cash because of indecision. Wanted to make a career/job change, or just quit altogether, wondered about starting a business, wondered about buying a rental in town, felt not fearful but uneducated about investing when I wasn't sure what I wanted to do in the long term-- resulted in the 'stash just sitting there. And sitting there. But that is for another post...
Mother in law? Yikes- don't scare me, but yes, in the very long term, I suppose that could be a possibility, although both of our families are on the East coast.
Johnny Aloha: The rent market is just not a known thing. It is a small valley, there is the commute, but some of the allure of Montana is just that things going differently here. Good and bad. My research today showed $550-600 for similar sized units, with a little more privacy, but older more needy (higher utility) accommodations than what our brand new space will be.
Yes, we will work hard on the construction costs. There is a great thrift-store like place here for construction stuff- toilets, doors, fixtures, paint. And we have done a complete remodel on our home over the past 11 years, so we know what to expect. The existing space has some foundation issues so that is why a new footprint/foundation cost is needed.
The privacy is an issue- but one I can deal with for the freedom of working part-time-- which is how this income can help us since we keep our living expenses down. But if I had a better handle on investment options for income (see above) I might be better able to weigh that decision.