Owner-occupying a small multi-family property is a smart move—you're reducing your own housing costs while building equity and generating rental income.

If she pays, then your really out of luck and you have to sue her in court for breaking the lease and damages.In general, I don't take people to court once I have the property back as the attorney fees and the fact you RARELY collect on any judgements (15% of the time or less) eats any profit and wastes your time.

Unless you absolutely love flipping I have often seen it is a means to generate short-term capital that you can then put into rentals (aka long term wealth). 

Fast forward three years: He’s moved out, and the property now nets him close to $1,200 a month in profit after expenses.

Income generated from within CA has to be reported in CA.

Like Kevin stated, they don't care about your business even though Im sure you are not only generating income for the area the cabin is in (generating local sales tax) but presumably you are paying taxes not only on your property but on the income you make from STR biz. 

Am I being dumb by NOT waiting, because it’s unlikely - I assume - my next deal will be as profitable (I got very lucky on this one!)

I worked them, remodeled them and made very little money and eventually sold them for little to no profit.

However, some developers are profiteering.

Again a high profit margin of 173.8%.