I'm sure there will be others with their own (and possibly conflicting) opinions, but for question #1, I always advise my clients to focus on properties in areas that 1) they currently (or previous) live in/near, 2) they travel to frequently, or 3) they have family/friends in the area.For question #2, the answer is going to depend on what you do for #1.

You should consider consulting an attorney.

If you must retain some cash, consult a tax advisor to understand the liability and optimize reporting.

@Nicole GrazianoI recommend that you have a consultation with a real estate tax accountant regarding your taxes.Bigger Pockets is a great place to find a real estate tax accountant. 

It’s also important to be as specific as possible in the scope of work for each line item—clear details can save you from misunderstandings or unexpected costs later on.I specialize in consulting services for situations just like this, helping clients work confidently with contractors by bridging the knowledge gap.

Combining short term rentals and a venue is a huge advantage because guests would not have to travel far and you could offer better rates as part of a event package.My current venue focuses more on baby showers, content creation and birthday celebrations rentals.

My goal, over the next five years, is to utilize real estate in lieu of my current hourly consulting income, by building a portfolio of rentals.  

This can be especially appealing for those who enjoy traveling or seeking occasional getaways.

Sometimes cities will allow this, but it depends on local zoning rules.If neither option works, it might be worth consulting a real estate attorney to explore your options.

Consult with competent legal counsel to guide you regardless of your choice here.