This puts the current market rents of $885–$925 per unit well within the affordable range, with room for modest increases post-renovation.I’ve also reviewed competing properties in the area; apartments seem to be listed between 975 -1000, and houses are listed between 1300-1900.

Short term it is difficult to make the numbers work, the cost of new construction and the time it takes to zone-plan-build are usually the main reasons why private investors stay clear.

My recommendation would be to choose potential markets - in several price points - that have strong rental demand and year-over-year rent increases and that also are in markets that are appreciating. 

And while short-term rentals are the big draw here, there’s also growing demand for mid-term rentals from snowbirds and traveling professionals, as well as long-term housing for the increasing number of permanent residents.Yes, higher interest rates are a factor, but the strong rental demand in the Panhandle often helps offset those costs.

Do you need to increase rents in the next year to cover your costs?

@Placeholder PlaceholderOne word of caution I would advise: If a community or local government is enacting restrictions and also regularly enforcing them, then its often a reflection of the local community sentiment which increases the chance of a neighborhood or nearby resident calling you in if they think you may be running an STR.

Furthermore you can vastly increase your returns through leverage using a non-recourse loan but that will definitely trigger UBIT but again the numbers can still make a lot of sense. 

However, San Diego is an extreme case.However rents increase fast in San Diego.  

Quote from @Havital Miltz: I think it will be very difficult to show 750 hours, most tenants deposit the rent, so there is no rent collection. unless you have a very high turnover of tenants, where  you need to show the houses again and again,  I am not sure where you can "find" all those hours for her, especially that you say the properties are newer, so how much repairs would you have?

However, without more information on what your preferences are, it is difficult to give you good advice.