There are SEVERE penalties in CA OR And WA for working with folks in foreclosure if you do not follow the letter of the law... there were many foreclosure rescue scammers out of FLA that got shut down by the local AG's and this spawned this legislation.

There are 2 buildings, the first in Fort Wayne, near airport houses 1 tenant ZF, a german auto-parts supplier, been in the space x 22 yrs and only has 2-3 years left on lease but space is custom for them and they have long contracts from automakers for parts for legislatively mandated discontinued car parts, when car models get shut down, the manufacturers have to continue to supply parts for 10-15 years by law, and ZF gets many of these contracts, also all work force very established there so company less likely to move, but even if they do, Heritage could carve up the 1, 100k space into 4 smaller spaces and then get 50% more rent.

But in researching the legislation, all I see is a new rule about disclosure. 

Too early to say whether the licensing and legislation/reform that's slowly being introduced across the country will clean up the perception but currently this is how many in the industry (particularly the ones you want to build relationships with) view the RE wholesale industry. 

Legislate pre-paid annual policies only?

My plan is to hold onto it as a rental property, targeting Section 8 tenants, as the rental income is quite attractive at nearly $1,500 per month.Here's the challenge: The property's purchase price and labor is below $40,000, and I'm uncertain about my ability to secure a traditional mortgage for a property at this price point.

One of the things I’m uncertain about is whether or not I should pay off personal debts before making investments.

Legislation around short-term rentals also seems to be a hot topic on Dauphin Island, so there is some risk to the STR market there in general.

Could you please cite the source of this proposed legislation?

This California State Legislative code outlines which encumberances will survive a tax auction (see below in italics), and I want to make sure that a Deed of Trust with Assignment of Rents does not fit into any of these categories.