Also, the costs in Florida are high, with expenses for insurance and the hurricane risk adding up.

I'd consider Florida because I love that they have tackled the squatter issue except I know insurance prices will creep up in the next few years.

Your new potential guests are insurance companies for homeowner displacement (flood, fire), buyers looking to move to the area but not sure where they want to be, sellers who want to sell but have nowhere to go, contract workers in the area, adjunct professors on a semester job, etc.

Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable).

In fact it may actually complicate litigation in the event a claim were to arise while adding additional insurance expenses to your real estate operation.To explain why this is the case I’m going to ask one very simple question: In the event a tenant dispute, premises liability, or any other claim were to arise, what prevents the Plaintiff’s attorney from merely listing your wife who it seems is the property deed holder in your fact pattern as a Defendant?

Just type "LLC asset protection insurance" in this forum's search box, and you will see dozens of threads on this topic. 

If you had to pick one state with the highest change of exploding insurance premiums over what they are now, other than maybe CA, it's Florida.

Lastly as an illegal unit it is  huge liability if there was a trip and fall claim, fire etc your insurance may not cover.I recommend renters insurance for whoever lives there is mandatory to add another layer of protection. last option not considered is you living in the bonus unit to have a free place to live with minimal risk 

Thanks @Max Emory & @Jake BakerI am in the process of test driving Stessa to see if it helps with improving my efficiency on the property management side, including keeping track or insurance, property taxes, maintenance etc.

The insurance company sent us a letter telling us they will be dropping us for that reason as well.