If i lived in San Jose, the first RE investment that i would consider is a local property with an ADU that had distribution on the lot that would allow a profitable lot split.   

My underwriting would have this large negative cash flow for 7 years.I would do a thorough underwriting but want to show using quick math the issue so I will use the 50% rule.  

Hey @Ricardo Polanco, so I guess I am not understanding the issue.

But it's rapid price growth and sales activity could indicate a more volatile market, with the potential for corrections if demand slows as affordability becomes an issue.

The issue I see most is the cashflow gets crushed by HOA fees and the added headaches of having them tweaking rules etc. 

I have no issue with the rust belt cities.

Fear the issues of tenant nightmares, fantastic because you won't have that with STR. 

Given the scope of your work, a simple plumbing leak would not concern me, it's a $200 issue at the most and ideally, it's just another line item when you do rough in plumbing for the kitchen.Being in a Milwaukee suburb, I am guessing it's a 1960s ranch, probably with galvanized plumbing.

It can be paid off by a refinance, or a sale or cash out of pocket.The other issue is the pending divorce.

Newbies create a lot of different issues, however.You are probably not going to be able to use Fannie Mae as a contingency.