Having said that, the federal government put a restriction on buying houses if you don't live here. 

Many state fair housing laws cover properties or situations that are exempt under federal law.

Beside the government regulation and insurance shutting down certain markets, STR industry will continuously grow.

Quote from @Zach Engen: The federal savings bank does 5% down on vacation homes, talk to Jason Wray over there.Email? 

The current real estate environment that we've been in for the past several years hasn't presented any opportunities for deals like this.Because of the above bullet point, my real estate folio is kicking off a ton of profit each year which is fully taxable at ordinary income rates for me with federal plus state that means 42%From day one we've always self-managed everything, and built a great team of sub’s and handymen in every area, so that I’ve never had to do any labor.

In case you haven’t read the previous responses or haven’t walked a mile in a landlord’s shoes. 90%+ of your problems are caused by your local/state government that you seem to be giving a free pass.

You can structure the deal to pay him gains at a zero federal tax rate.  

It's a monthly REI networking meetup at Red Stick Social on Government in midcity.

@Placeholder PlaceholderOne word of caution I would advise: If a community or local government is enacting restrictions and also regularly enforcing them, then its often a reflection of the local community sentiment which increases the chance of a neighborhood or nearby resident calling you in if they think you may be running an STR.

I have had several cases where I finally got cops or government officials to only do their job after being very loud to the newspapers, but it does work.