The amount of STRs that will pull out in non-regulated areas will flood the LTR and MTR markets I am presuming.

Here are some practical steps you can take:First, make sure you have a clear and comprehensive written agreement.

This lets you bypass the traditional bank financing with many rules and regulations.

Hope that’s kosher…You might also want to consider moving your notes to a servicer, thus you'll be in compliance with all applicable statutes and other crazy regulations spun up by Liz Warren. 

I’m not sure what the rules,regulations, restrictions are for renting out basements, so I’d appreciate some input from people who have done this before

Regulated by the county of Riverside not the city, thus not subject to the restrictions.

Unless you find an attorney that exclusively practices in this area, they won't have that level of knowledge.  

.- Insights on the best practices for structuring these entities for optimal asset protection and tax efficiency.- Any potential pitfalls to watch out for during this process.If anyone has navigated a similar setup or has referrals to professionals who can help, I would be extremely grateful for your input!

And practically, you can keep more of your money.  

Was it finding the right market, navigating local regulations, or building a network?