Many people are also being laid off creating hyper competition for those positions.  

They're inexpensive, there's less competition for them, there's strong demand for them as LTRs because there isn't as much supply, lower repair/rehab costs, and there's typically less wear and tear because you don't have as many folks applying with multiple kids, pets, etc.

Yet it still seems over-saturated with tons of competition. 

After a mortgage, large HOA fees and expenses you'll likely have a great deal of expenses.Then look at the competition and what rates they are getting along with how full their calendar is.I stayed at a condo in Myrtle Beach that I rented on VRBO and was amazed by how cheap I could rent a Condo.

I have had clients do the homestyle renovation loan it can be a good option and is less stringent then 203k.One thing to note is most people doing basic rehabs do not pull permits here so your competition is able to do the rehab at a much lower basis then you are using homestyle. 

What is it like for an investor in a market as competitive as San Francisco?

Usually there is more competition for a property that is bank financeable that is under market value which then drives up the price and thus decreases eventual profits.  

STR units provide competition to hotels, especially during peak seasons/festivals/major events, which redistributes profits from hotel stakeholders (who are often not local) to locals.

Understand it is not "Money" that is the inspiration here, it is motivation.We get our offers accepted even when our offer was lower than the competition.

Because on the surface it is such a good deal, tax auctions tend to be very competitive.