Two contributing factors are high construction costs and regulations that make obtaining a construction permit difficult.California already has a large housing shortage.

It's not unusual to see 3/1 and 4/1 Section 8 properties but that single bathroom would not do well as an MTR.Overall, I'd say location and the shape of the property is going to be your key driver and the factors that will make or break you in the MTR space so very carefully evaluate both before you make your decision. 

@Jaekwan LeeThe rent-to-price ratio and expense ratio are critical factors in property evaluation.

@Sam LiuDepends on how much headache factor you're looking for. $3K x 12 months occupancy (LTR) = $36,000 annually $4K x 9 months occupancy (MTR) = $36,000 annually Damage can happen with any property at any time.

I had analysis paralysis yes it’s a real thing, even if it’s just an umbrella term for a multitude of factors.

Can usually allot 5-10% vacancy factor and same for maintenance.9) Class B usually also okay, but needs more attention from owner and/or PMC.

Be mindful when you do the cost segregation study, the basis will be based on the carryover basis factoring in the deferred gain via 1031 exchange.

Loan amount, fico score, experience and occupancy play a factor. 

You also mentioned that it's an STR with an average stay of less than 7 days, but that's not a factor on whether it goes on Schedule C.But just so you're aware, providing hotel-like services so you can put it on Schedule C isn't the only way your rental losses can offset your other Schedule C businesses and your husband's W-2. 

Are there any key factors to look for in selecting a good commercial property real estate agent?