An S&P 500 index fund, incredibly unlikely to ever go to zero.

Great question and both paths have strong potential, but choosing the right one depends on your goals, risk tolerance, time availability, and tax strategy.

Not sure, but rely on your (new) guarantor policy and you shouldn't have concern if the tenant has a guarantor. 

I have zero experience in real-estate, but I do not want to have a 9-5 be my main source of income.

If you have a unit that is even close to STR quality, I would not place section 8 tenants (I admit I have zero personal section 8 experience).Next thing to consider if the unit is STR worthy is do you desire the effort of managing them   We self manage our LTRs but use outside mgmt for our STRs but both managers know I have dedicated maintenance staff.  

Quote from @Brandon Croucier: As a broker, I personally steer clear from them as I've spoken to numerous Reps from the company over the years (they clearly have high turnover).Based on my analysis of the market I find there are many better options in regards to pricing, efficiency & risk tolerance. 

Many investors aim for an 8–12% CoCROI, but the target can vary based on the market, risk tolerance, and whether it’s a single-family or multifamily deal.

Every investor has a different risk tolerance...if you have no potential reserves, then that is not a good situation to be in. 

The one I found seems to understand my investing goals and my tolerance for risk well.

Thus, zero income resulting in zero tax.