The second phase will introduce modest restrictions, with continued data analysis to inform further regulatory measures.

Or is it restricted entirely to ingress/egress, i.e., I add 150 square feet and put in an exterior door, but I can't use the 150 square feet for kitchenette, laundry, etc.?

Firstly, it's important to point out that Pismo Beach, like many other California towns, has imposed stricter regulations on STRs in recent times.The city has drawn a distinction between three types of authorized 'Less Than 30-Day Rentals,' specifically a "Short Term Rental," a "Vacation Rental," and a "Homestay Rental."

Your debt will restrict how much you can borrow. 

This is a potential life raft for all STR owners who have been hijacked by the ever-increasing fees imposed by VRBO and AIRBNB. 

My realtor is reaching out to the listing agent but told me the seller may have restrictions (unclear what the restrictions are) on changing the contract now since they are doing a 1031 exchange.

assuming they would not restrict your use of the property for investment purposes I have to wonder if this would be an efficient way of partnering in the beginning of your investment career?

@Ryan Randall  talk to the fire marshall and get a copy from them of any local restrictions. 

I do have one house hacking client where I sold his condo and then helped him buy a larger townhouse where he can do forced appreciation through rehab (which worked out really well.)I went from a house hacking condo, used a HELOC and then did the FHA 203(k) to a house and built an ADU.Because of the rental restrictions, it might make sense to sell at some point since profits up to $250K is tax free and scale up that way. 

The proposal could reduce stress for landlords, ensure smoother transitions, and improve communication with tenants.Additionally, the proposal includes a 5-day grace period before late fees can be imposed.