OK, I happen to know lots about SF Real estate, again because I own a formerly TIC converted condo and also a 3 unit building that I short term because they are rent control.
A 3 unit building in SF was mostly likely built before 1978, thus makes it a rent control building, UNLESS all 3 units were condo converted.
Now, about short term rent, the law that lots of people misunderstand is that it is illegal in SF, but no, it is not. It is only illegal when you do that in 4 or more units building. 3 units are still ok, and that's what I do as well.
The OP's friends can definitely still do FURNISHED rent for 30 days on VRBO and can therefore charge double the rent than unfurnished. No one in their sane mind would opt to stay with with that kind of crazy rent. Managing short term rents, although lucrative, takes lots of work. I happen to enjoy the work itself, as long as I don't get bad renters, which could happen once in a blue moon when I don't screen very well.