Wade returns for non performing notes has tightened and is now in high teens low 20's.

Then there’s city regulations—some places heavily restrict short-term rentals, so you’ve got to check the rules.If you find the right spot and automate stuff (guest communication, cleaning, etc.), it can be profitable.

What are the pros and cons of each, and which offers the least restrictions, flexibility and cost savings for my intended purposes?

There are also 'mezz' lenders (typically for larger transactions) who will cover up to 90% CLTV and require you to bring the remaining equity to the deal, and additionally there is Gap Funding in the form of unsecured personal debt.The latter can potentially be the most expensive option, but allows for true 100% financing as there are no restrictions for how to use these funds, as they are unsecured, and generally obtained through personal credit, income etc (since there is no collateral for obtaining these funds).

If your client is planning to use a loan to purchase the portfolio, they should be aware that many lenders include prepayment penalties or restrictions when properties in a portfolio are sold off individually.

Also, long term, I expect Sac will enact tougher restrictions on STR, given the intense housing crunch we're experience, so I personally don't expect that to a be a good long term strategy.

The $1,500 net cash flow you mentioned represents a tightened rental return that could provide consistent passive income.

Do any of the tenants have Dogs (Breed restrictions are individual to each company).These may not prevent you from getting insurance but they may limit the number of companies willing to insure it.

Like others have said, you can't restrict actual service animals but disclose what is going on.I have yet to have someone with a service animal not tell me in advance.

Deed restrictions are an encumbrance, restrictive deeds can expire and a seller may not be aware if covenants expire or you can use deed restrictions as a negotiating tool and may still change the use without violating a deed restriction.