I don’t personally invest in STR’s, but previously served as legal counsel for a company that owned a hotel portfolio valued over $1B, and understand the space and policy considerations that are creating barriers across the country.

As a local investor in San Diego myself who used to invest in the Midwest...the low prices can be very enticing but make sure you really know the market first and what you are getting into before pulling the trigger...when you are out of state you are at a disadvantage as properties can differ quite heavily from block to block. 

New investor here and I’m looking to pull the trigger on a flip however I’m having a hard time picking the right amount to spend on a purchase and rehab because I don’t have an idea of what a full gut should cost. 

some people take into consideration things like landlord/tenant -friendly states, where they'd want their kids to inherit property, higher-appreciating states, crime rate, climate, MTR/STR potential... sooooo much to consider here! 

@Joseph WeisenbloomAny monetary consideration at all?  

I would greatly appreciate insights into how this scenario impacts the original borrower's VA loan entitlement and any potential solutions or considerations I should be aware of in proceeding with this transaction.

Reno is considerably less expensive as an entry point compared to CA. 

Lol on the "loophole" trigger 

Check out the 1040 instructions if you want to find the penalties, and what triggers them.

With that type of experience, I might target a fix/flip or HML that has experience triggers keeping your costs low and maybe even something like deferred interest payments or bundled fees.