Essentially, this boundary delineates the city limits of Lexington and regulates new building developments within its confines, preserving the surrounding rural, natural, and agricultural landscapes.

If you're open to a bit of creativity and local regulations permit, converting additional spaces like garages into rooms can further enhance your rental income.Overall, your strategy has a good direction.

We were initially told that this would not be possible due to regulation.

This reminds me of how I view STR regulations in Colorado.

All logic tells us that either the SEC or CFTC will govern those trades and ALL will have to be compliant with the regulations of either agency. 

Depending upon whether they are a bank or a trust company, custodians are heavily regulated by the IRS, DOL, possibly the FDIC, State Banking Commissioner, and the Comptroller of the Currency.

It’s just not smart.Second, with an FHA loan, any title company that handles the subto transaction is ignorant of the regulations/published guidance which forbid it. 

Have you had any issues with the city regulations regarding STRs using this method? 

Regulations differ by cities, so you'd have to check for each market.

What are you thoughts on STR changing local regulations?