If there is no legal problem and she tours the space and finds it adequate then I would be happy to rent but I want to do my due diligence in determining if this space is acceptable to rent to more than just a single individual.

Since no deposit was sent is the contract still valid? 

The m2m tenant presumably has lived there for MORE than 12 months, so based on AB1482 "no-fault eviction" legislation, you cannot simply give notice to vacate.

To me the biggest risk to STRs is the municipalities shutting down the ability for owners to rent homes out short term. 

For example, you might pay them $2k now for the right to buy the property no sooner than 12 months from now and no later than 24 months from now for $100k.

Hopefully you have a lease that you can point to that spells out things like "quiet enjoyment" and no unauthorized persons living at the property for more than 2 weeks, for example.

The biggest thing to consider is what your timeline looks like.

I hear LLC, no LLCs but umbrella policies and keep pulling out equity to help with asset protection.  

We’ve been good tenants paying on time for the entirety of our stay here.The property owners are brother & sister (and I believe a third sibling), but they’re never really on top of things, and no property management.

There's just really no one size fits all and a lot of it is trial and error.