This would negatively affect the possible equity in the property because it would greatly increase the taxes, as the city taxes are already pretty high.So obviously scenario 1 is much more complicated, with many more hoops to jump through, but the amount of income to be generated seems to make it worth it.

As fan (nerd) of sports statistics, maybe I should have stopped with this one call and finished my career with a 1.000 batting average...but I digress!

I would expect negative cash-flow with a pm service.

Investors from Cali are buying them with zero opportunity for cash flow or even negative.

@Padric LynchAs long as you let the guest know in advance of booking and/or make it very clear on the listing, that should not cause negative reviews.

The house cash flows with me in it, I have fantastic tenants, negative vacancy and they're staying for the long term.

The negative impact that I've seen on residential renting is in the large high-end building where management companies are now offering 1 to 2 months free rent.  

The herd buys properties that make negative cash flow to an annual 5% return on your money, if you are the lucky investor in the herd. 

When it comes to the balloon payment, I have heard more negative than positive about it, so I am a bit conscious about it. 

I don't work on conventional owner occupied loans anymore (non fannie/freddie investment only for me) but I do know that the lenders those brokers are subbing them to have incentives to have loans close, have minimal underwriting touches, etc etc and having the borrower walk away after going through underwriting could have a potential negative impact on them (in the form of basic lender "brownie points" given to brokers) in addition to the obvious opportunity cost thrown away from time spent.