They are very likely based overseas.

You should consult a tax professional for an answer based on your unique situation, this is not tax advise just general information.

Hi Cecil,We're based in Redding as well and operate Authority Property Management.

One challenge was getting the hotel occupancy up after renovation since no one had booked or stayed in years so there was no existing guest base.

The reason you would hire a licensed professional is to assist with you not gettting SCAMMED and help you with negotiating prices and terms...based upon State Law. 

South and South East is less expensive, but you're not going to get the appreciation and my impression is it's not as good a tenant base.

If a single-family owner-occupied property is worth $400,000 - I wouldn't invest more than $280,000 (70%) in a note secured by the property.ITV takes priority over desired yield - so even if the note discounts to $350,000 based on desired yield, the investor still won't go beyond their maximum ITV. 

@Eric L ConryI would base it on your cash flow NEEDS, not wants.

We are based of course in one of the most expensive places to live yay to that.

Were based on dubious and unproven speculation, assumptions and best case scenarios2.