You must analyze all the data (size of properties, # of properties of each size, location of best producers, regulations, # building permits for that size issued in the last year)3.

Simplifying the processes, laws and regulations into a few basic scenarios when in reality each state has a wildly different set of rules, laws and procedures and each county and often municipality has their unique set of procedures within the state3.

Limited partner's test: (Only three test -Under temporary regulations, individuals who are limited partners and meet the more-than-500-hour test, the five-of-10-years test, or the three-year lookback test are treated as materially participating in any activity of the limited partnership for purposes of applying the passive activity rules)De Minimis RuleIf a qualifying real estate professional aggregates activities into a single rental real estate activity and the taxpayer’s share of gross rental income from all of the taxpayer’s limited partnership interests in rental real estate is less than 10% of the taxpayer’s share of gross rental income from all of the taxpayer’s interests in rental real estate for the tax year, a de minimis exception applies—the taxpayer can determine material participation under any of the tests in Reg. § 1.469-5T(a)  that apply to the rental real estate activities.

I'm and experienced STR owner and manager and multifamily owner operator, so I know about 28 day minimums, local regulations, underwriting, insurance etc.

Low taxes and regulations. 

Hi @Megan Fitzgerald I would be sure to do your research online and it may be worth checking with a local real estate attorney as well or another local attorney who may be familiar with the your areas laws/regulations.

Knowing the rental increase in California is regulated, I am not intending on raising the rent for at least a year if at all. 

There's rent control, rent increases, rent regulations, etc.

I can only say that from our 100s of clients in your situation who are helping family in India and Pakistan own in the US, it widely depends what rules and regulations to follow based on your facts and circumstances.

With the new regulations Cleveland passed that makes the resident agents liable for the properties, I'd expect property management rates to rise to 20% in Cleveland over the next few years.