Also in the condo docs read the rules and regulations to make sure you can rent the unit out and understand your responsibility if tenants cause problems with other owners.

I got my hand slapped by the state of Oregon when I did something similar .. its easy for regulators to say notes are securities which they all are .. but there are exemptions.. the deal with Oregon was that the note investors were 100% relying on me and the model.. so they hit me with the Howry test..

Short term rentals are not allowed in Thornton (except rooms within your primary) but you might be able to get your premium by renting as a furnished rental to traveling nurses (as long as the lease term is over 30 days as per Thornton STR regulations) or some other similar "outside the box" strategy.

Where I was investing, the local govt. didn't have any regulations on rental property. 

Banking regulators don't like it, bank investors don't like it, and bank compliance people don't like it.

@Dale Abella The important thing to remember in this situation is that although he is your friend, you are also his landlord and he needs to follow all the rules and regulations provided in the lease.

I can't get it from the horse's mouth here as to the regulations, but supposedly if you have a septic tank fail and the county learns about it, you're on the hook to remediate the damage and then connect to the sewer.

@Mike Lin, Just a disclaimer first - I'm not totally up to date on all the SF regulations cause things have changed a bit the last few years. 

There are no real differences outside of the regular discretions in finance, taxation and regulation between the two countries.  

However, in virtually all the proposed regulations limiting STRs, the owner occupied STR is typically exempted.