I just bought a 2nd home/Airbnb in Lake Arrowhead and I can tell you the competition is very stiff and the market definitely seems saturated.

Be prepared for stiff competition. 

@Andrew S.I have had tenants stiff me on rent and done damage to my properties.

Some people are just bums, and are going to stiff you on your money, destroy your house, and have the police break down the door.

This should not happen often with a properly screened tenant.Now if I assume you have a dilapidated unit, packed with awful adult tenants in the unit and they have pets, they pay late every month, damage the place, and stiff you on move out, I come to around 10 hours of work during the year.

The low downpayment homeowner can't pay their mortgage, but the no homeowner renter in that same situation is going to stiff rent too.

The flip competition is so stiff here, there are other buyers in town that can pay more than we can for many reasons, IE using their own cash, have their own crews, have other RE related businesses they can make a profit in on the same transaction etc.

First, if they stiff you, you can't garnish them.

The way you wrote this sounds like you want to just payoff the loan and stiff your friends family out of the equity in the home

If you use DSCR loans as permanent financing, you could be locking yourself into loans with stiff prepayment penalties that usually have a 5-year prepayment step-down penalty.