You CAN rent the property as long as you comply with number 1, but you cannot use rental income to qualify.

., while John has a lot more experience than I do, and no real estate investor wants to be a restaurant operator, there are some upsides to Option 1, as I see it.The lower base rent could allow the Option 1 tenant to remain open throughout a recession, while option 2 may decide to close down the sales drop, if rent is too high.But beyond that, are a lot of factors that I would assess:Who is the actual guarantor on each lease?  

Companies wanting to set up new operations will not choose high-crime cities.

In my case, I just purchased my first out-of-state property and plan to operate it as a STR. 

Thanks all, only clarification is I’m making money in Summer, and apologies for miscommunication - I meant on average (annually) I’m losing 5-10k so realistically will lose $75k on it first 12 months operating (but created about $800k of equity).

Rents tend to rise over time, amortization steadily increases equity, incomes rise, so the investor has a lot of “cover” for unfortunate timing or operating “mistakes”.Number 2 - periods like 1932 - 1941 and 2008 - 2013 are much harder on this strategy.  

Currently I’m operating it as a STR, but I need a new cleaner and the quotes I’m getting are in some cases double my nightly rate, and the amount it grosses is only slightly more than what it will do as a LTR.

One for security deposit and one for operating/rental.

If I am looking at a operating STR, I know where to make changes and opportunities.

If you are going to invest, make sure you know the operator well and that they are reliable.