ValuePenguin is a good source for the relative cost of insurance by state.Operational Costs - Costs like property taxes, insurance cost, state income taxes, regulatory costs (ex: time and cost to evict, rent caps, rent control, certificates of occupancy), inspections, rent control, etc., have a tremendous impact on your return.

The amount of regulatory paperwork involved was mind blowing.I do not see realtors going away just because of the amount of paperwork involved!

Most QI's have no government or regulatory oversight.  

If the land-lord fails to record the required regulatory agreement within six months of filing for this exemption and puts the units back on the rental market, the rent shall not be decontrolled and the unit must be offered to the tenant that was displaced. 

Check with the appropriate regulatory bodies to verify that they are in good standing.Review the terms of the deal: Carefully review the terms of the deal, including any contracts or agreements, and make sure you understand everything before you sign.

You'll want to feel reasonably confident you can hit closer to 2.75 to 3.00 times the rental rate to have a decent margin to compensate yourself at all for your time and effort.As others mentioned, your biggest risk with arbitrage is that you will not be able to cover your cost due to competition or due to regulatory conditions. 

If she doesn't return the $400, I would report K to whatever regulatory agency in California deals with consumer fraud (if there is such an agency).

Same amount goes into a $500k loan as a $50k loan, and can be a losing proposition for lenders due to regulatory pressure alone. 

However, other regulatory bodies are more clear especially for people in certain real estate roles. 

Here in Colorado, each plant is banded for regulatory reasons.