This is a common theme across the country with many municipalities enacting similar restrictions including where I am located in Philadelphia. 

The state doesn’t have rent control laws, but landlords are prohibited from collecting more than one month’s rent for security deposits.

-Decreased security deposit to 1x for MTR.

Ask for higher security in person have them back out on their own if they still want the place you will be safer with more security

The loan has a MUCH higher risk for the lender because it isn't secured by real estate.

Like mentioned it's also beneficial to keep up to date with what's happening in the area your STR is located, and make sure the decision makers are aware of hosts and what they bring to the community.

As you've mentioned, great schools, area in general is nice and it's centrally located.

@Sakib KhanRecommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

We are General Contractors and part of why my cost for the conversion is so low is because we have the resources to pay at cost and the property is located in a county with lower labor costs than other parts of California.

Do any of these locations make sense to you?