I'm trying to prepare incase this is true.

. :)We definitely want to invest in true vacation rentals as well but this will be a good learning process with not as much risk to start.  

True although the fires this year just adds to the reasons to leave California (excessive taxation and regulation, overbearing political correctness, downtowns littered with feces, etc.).

This would probably allow me to qualify for the FHA loan if this is true since the giant loss is throwing off my DTI. 

I am seeing more bureaucracy like inspections and fees, which I can understand because some people let their places become true hazards.I do agree what @John Underwood said and would consider lawyering up. 

I also want to say that if you see this as a true passive investment, you'll be in for a surprise because it's anything but....usually.

You can't legally deny a true service animal.

Based on what you have explained here and assuming that all of it is true, than you really only have two options to get it rented1.

Quote from @Chris Seveney: I wonder what the OP's true motivation is for asking this question. 

What David said is true.