Any STR areas that can have decent returns in this current market near Southern Cal?

[Daksh Raheja]

We are planning to start our real estate journey and hoping to get our first STR this year. We would like to be within 2 hours driving distance as we are planning to manage it by ourselves.

We are okay with taking up a mortgage as we only have 1 from our primary home in OC. Would like to be ideally less than 500k, but can go up tp 600k if cash-on-cash returns are good. 

After doing some research, it seems most of the places like Joshua Tree area, Palm Springs area and Big Bear are over saturated. With the current home prices and interest rates it seems it would be very difficult to just break even with high vacancy and low ADR these days. Also most of the Cities are not allowing STRs anymore in SoCal.

We wanted to start locally before we venture out of state, but do you think it is better to start Out-Of-State right away or are there some options locally? I haven't looked at or researched anything out of state yet.

Any input from current STR Investors or Realtors will be really helpful. Thanks