My wife and I are looking at our first investment property, a STR vacation home in east Tennessee.I work and she stays home with the kids. 

My tenant of 8 years vacated and obviously had allowed the dogs to urinate on the floors, cabinets, carpet, etc causing major damage.

My plan initially would be to live in one of the units while managing the other 3 vacation rental units.

If you are looking at vacation rental properties, it's a supply issue.

Vacation rental has more potential for making money. 

My enjoyment of my home is more important than a hundred dollars a month.

We will credit 50% of the placement fee if they vacate within the first 6 month.

Should I continue to enjoy higher returns on the existing property (and grow portfolio slowly), or lower my margins but increase my portfolio size quickly?

That allows us to enjoy retirement, help our kids with college and give them an inheritance after we are gone.

Kick back in the living room, cook your favorites in the kitchen, relax on the shaded back porch with fenced backyard, enjoy the community-on-your-own-terms household, or zip over to the excitement of Boulder or the beauty of the Rocky Mountains.This room for rent is part of a CommunityLiving Home, which are high-demand and high-quality rent-by-the-room living arrangements.