You may want to research key terms Prop 19 and parent-child exclusion to investigate further.

I have been thinking about buying some property near the beach for STR, but haven't done much investigation yet.

Like any other market it takes a lot of investigation to find the property that fits expected results but with time and patience there is opportunity

I will look into this... good point and worth investigating.

W/o much info and familiarity, I suppose using a high level stats like the average RTP ratio of a city might provide a reasonable 1st filter to have a short list for further investigation.

Also investigate who is living there on what's going on before trying to bid. 

After further investigation that my broker failed to initially do I discovered that the last time the 10 year T-bill dipped below 3% was back in 2010.

Well, believe it, as it has happened, I spoke to the title company myself so this is not speculation or heresay.Apparently, as explained to me by the title company, BofA scans the public records and when they see a transaction sold for more than twice what it was purchased for (regardless of the amount of repairs needed - they don't care about that)they flag it and investigate.

Do any of you have any experience with what that could mean and how I could investigate it further outside of asking the tenant directly?

Investigator at market rate is, make sure your competitive yet not leaving money on the table, etc.