Throwing good money after bad to delay a negative report.  

But there are just as many who won't...don't get stuck in the negative.   

Moreover, the government has made it very clear that it wants to attract foreign investment and a measure like that would be totally counter-productive and downright dangerous and negative for the country and it's the economy.

I have been a part of companies as a W2 employee that literally one day they walk in and shut it down because the day before their funding dried up, or their was some negative news. 

There are many reasons that adding a single ADU in southern CA is a less than ideal RE investment (i will post a list at the end) but the negative initial equity is a primary reason as the initial negative equity position consumes the initial cash flow and can take many years to recover.As for converting your home to a rental….

Also, focus on 2 years of job/income stability.Class D Properties:Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciationVacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions.

Chris,What are you looking to finance or accomplish I ask because with a quick Yelp review there are some negative reviews.

I stayed in a STR with over 200 5-star ratings, and not a single negative.

Also, the fees plus being a forced buyer with a deadline on a 1031 exchange may negate the small tax savings.

- FYI: it's only illegal to try to rent it out, the property owner can usually legally live in a nonconforming basement unit.If you do all this you may still negatively cashflow each month, so make sure your income can cover and/or your cash reserves.If you do this successfully, you will learn more in 1-2 years than you would reading here on BP for 5+ years:)Good luck:)