I am NOT for sure, but I would hypothesize that it would violate at least some realtor ethic's codes if not some specific laws.

I'd hypothesize that to most, "saturation" means there are too many STRs in a particular location.

I'd suggest this idea; hypothesize a worse case scenario and walk it backwards to the final question - did you take every option available to insulate yourself? 

I don't have much experience with that, but when they go to do the appraisal or the termite inspection (which are both normally required on a conventional loan) then they are probably going to cite the lack of normal amenities and I would hypothesize that it will throw up red flags for the lender.Either way I think your investor buyer pool is drastically decreased for financing issues and even moreso because of the level of work required as Charles described.As for the vision of normal homeowners, I do think that some type of software could help overcome that gap, but I think you are looking at a much more time intensive sales and marketing strategy, then.

Unsure how strict enforcement of this is, and many hypothesize this requirement will be loosened over time, but something to keep in mind.https://focus.senate.ca.gov/sb...

In other words, I hypothesize that you have negative leverage on this investment, and thus will slowly lose money over time unless you get large rent increases or huge appreciation gains, or can cut operating expenses.Rent increases: I don't think you'll get large rent increases because folks that can afford that larger rent and want Madison City schools will actually just go and live in a nicer house in Madison. 

Therefor I hypothesize that forming an American LLC for the properties, and owning that LLC would be the most advantageous.Please let me know if you have any insight, as I would like to begin purchasing property within the next couple months.Thanks,Daniel Strange-Dedier

There are a lot of people around the world way smarter than I am working to answer this very question - that said I think the best any of us can really do is present some hypotheses about what the future(s) could look like. 

In other words, if you could hypothesize her profit margin, you could better answer the question of what she is willing to give up in gain.

If you can find 3 homes like the one you are hypothesizing, then keep two and flip one.