General rule of thumb, higher the CAP RATE, higher the risk.

My rule is that whenever I try a new business, give it at least 12 months.

I’d also be looking at property management (likely long term PM, although not ruling out short term PM).  

I can't speak to the BP rules and how they are enforced and things like that, I was actually pretty surprised they banned him.

@Will QuinnI live in the Tahoe basin, and different areas have different rules.

And the rules are quite relaxed. 

And I think I've ruled out my original option #1, which was to sink all the proceeds from sale of my current house into next primary residence in Southern California. 

The additional income from STR could justify the renovation costs, but it requires active management and market awareness.LTR or Break-Even Strategy: Renting long-term might simplify things, but if it only breaks even, you’re right to consider if appreciation is enough motivation to hold.DIY Basement: DIYing the basement could increase STR appeal without the full $50K outlay, especially if extra space attracts more bookings.

As a general rule I like to buy the worst house in an area and make it one of the best.

@Sharon McCants Yup around the 100-150k/unit mark can get you into a solid B area here that'll hit the 1% rule in most cases.