This strategy aligns well with the buy-and-hold model.Leverage Local Expertise: Partner with professionals like real estate agents familiar with rental markets and property managers who understand tenant needs.

Otherwise, it’s treated as a partnership requiring Form 1065.Get an EIN (Employer Identification Number) from the IRS (free) for tax and banking purposes.Separate personal and business finances by opening an LLC bank account and keeping rental income/expenses distinct.Consider an operating agreement, even if not required by state law, to define ownership and responsibilities.Liability protection: An LLC helps shield personal assets, but you may still need landlord insurance and an umbrella policy to cover lawsuits and unexpected claims.Tax strategy: Rental income typically passes through to your personal return (Schedule E).

I like this strategy and plan to continue. 

So the exit strategy is the same with both options.

Buying a second home to rent out is a solid strategy, but be sure you understand the cash flow, including mortgage, taxes, and potential vacancies.

I personally would revisit your strategy of buying a negative cash flow property in SoCal, right now.

Consider your investment strategy—house hacking, turnkey rentals, or real estate syndications—and start networking through local meetups or BiggerPockets forums.

The best strategy I seem to have deployed so far was to contact all my current tenants and let them know I’d give them a cash referral fee of $250 for anyone they recommend to me that goes through the vetting process and successfully moves in.

Read books, network, research markets, and plan your strategy.

The trick is to know the market and have a solid strategy for your approach.