My wife and I create Real Estate Meet-ups wherever we live (lived in many places due to being in the Navy for 21 years) and I believe that these groups help change that potential energy of potential investors into kinetic energy and make kinetic investors.

They said that per California Revenue and Taxation code, they're asking me to provide them info such as the purchase agreement, rent rolls, etc. to assist them in doing the reappraisal of my property.  

I have also been told by multiple people that I should create an LLC or Trust. 

Hello Michael,I own a company that specialized in building ADU's in Los Angeles and while I can't speak to the demand in your particular zip code what I do know is that each ADU we've built has created an ROI for our homeowners.

And I guess if your always paying cash and can hold long term that might be true.. but you bring in all these payouts up front and debt behind it and that creates the risk.

Looking for ways to create more passive income for myself.I guess an additional question is how profitable should I expect a short term rental to be in that area? 

This is the one that sparked Tennessee to really start to create legislation on it. 

And if you work hard, you can even find a cash flowing triplex or quad, so you can get a DSCR loan with little income to show.The comments saying it is hard are correct, but nothing good comes easy and it would be a big shame to forgo the #1 best tool in real estate investing, house hacking, without even giving it a chance.If you want to work hard to create something for yourself and your family, current or future, please reach out and I will help you look for a house hack that will kick start your investment journey.Best of luck!

That creates a really nice price / rent ratio which is favorable for investors looking for cash flow.

Talk to your tax advisor about how to release your passive activity losses based on your situation.This post does not create a CPA-Client relationship.