Malibu allows it but requires a 15% "hotel tax" on the gross revenue.I would recommend looking out of state or underwrite the property as a long term rental in the event laws change.

In Berlin, rental arbitrage has been very profitable, with average annual margins of 25-40% after all costs but before taxes, so shifting to a market where arbitrage is barely breaking even is definitely a reality check.Given your experience, would you say the best way to enter the market now is through purchasing properties with financing?

Call me fiercely independent but I don’t want other people arbitrarily telling me what I can and can’t do with my hard earned property.

Turns out the theory was right, but the decline has been even steeper.You might be able to predict whether a future market will be better or worse than the current one, but predicting how much worse or better is nearly impossible.And don't even get me started on how sponsors could be manipulating purchase cap rate, whether intentionally or unintentionally, by reporting pro-forma caps, non tax-adjusted NOI, and so on. 

There's obviously quite a bit of diligence that comes after such as who the key principles are and their credentials/track record (both balance sheet and experience), the underlying real estate and thesis behind the investment & tax prep and audit procedures but as a general rule of thumb if the investor can't get past the first part which is understanding what they are investing in, passive investing is probably not for that individual. 

From a tax perspective, you'll want to take what you paid for the property plus calculate the improvements you made to the property during your time of ownership.

Taxes: Be aware of potential transfer or capital gains taxes, depending on your state.4.

a lot of people will poo poo this, but I also live in a market where cash flow is low, property taxes are high and properties are expensive (which is a relative term).

Also these things cost money to sell - agent fees (5-6%), whatever your buyer is going to ask for at closing or try to hit you at during inspections (likely several thousand) plus taxes.

I do not want to stretch into California due to the Landlord laws and taxes.