But to answer your question why you still see so many active STR's on Airbnb in a restricted area, it could be a couple things: It could be a "hosted rental" meaning the homeowner is there and is just renting rooms on Airbnb.

However, if actively working in the business, the IRS requires taking a reasonable salary (W-2) before taking distributions.Since this is your first project, it’s a good time to discuss with your CPA whether an S-corp is the best structure for future flips, or if a different entity type (like an LLC taxed as an S-corp) might be more beneficial.This post does not create a CPA-Client relationship.

The other applicant had a bankruptcy in 2021 and has active trade lines (I can’t see the detail on when these went into collections). 

Franklinton, Southern Orchards, King Lincoln, etc... my brother lived on cypress and within 2 years had his car totaled by a drunk driver and his rental property a guy turned into a daycare. a tougher market for sure. king Lincoln and southern orchards are great. new builds in 43206 are sky high right now and king Lincoln too. my favorite three zips are 43206, 43205, 43203 and I'd call them way better than C+ based mostly on existing price per door of multifamily, price per square foot of new construction, new construction and development activity / interest, and a few other factors but mostly what you can charge for rent.

My goal is to build relationships with active investors in the area and learn more about analyzing deals and identifying solid opportunities.

Best bet would be a “partnership” with a monied individual looking for a high risk/high return passive investment with you providing the “active” part.  

If you have active participation in the rentals and your income is below $150,000, you might be able to deduct some rental losses which could help you with your other income such as capital gains.

Are there any challenges I might face, especially if my long-term tenants aren’t comfortable with the short-term rental activity in the same building?

Quote from @Joseph Alfie: Hi i am actively looking to buy apartment buildings in these areas.

First you want to look at Redfin dot come for the zip code and see how the Active properties are fixin' up their spread.