Warren Buffet said the most important part of investing is to protect your principal. 

A professional property manager should handle the heavy lifting, ensuring your investment is protected and profitable without adding stress to your plate.

Agree, STR are saturated but given the numbers, I expect unsuccessful players will leave the market.  

Additionally, involve a real estate attorney to ensure the transaction aligns with legal requirements and protects both parties’ interests.

When its included in a lease for real estate then the laws pertaining to residential rental security deposits in your state apply but when its separate you should have more leeway to get some additional deposit to protect you.

You'd have to do the research locally, market by market, to determine who the players are.

The landlord should be named on the tenant's insurance policy for additional protection and to assist with tracking compliance.

Also any tips for automating this as much as possible and how to protect the property financially and property management would be appreciated.I ALMOST understand the rental arbitrage strategy if building a company scaling with say 30 + units and looking for high short term cash flow.  

Anything I need to be aware of or make sure they do for my protection?

@Kyle Kulhanek To retitle your Chicago condo into an LLC for liability protection, start by forming the LLC with a clear operating agreement outlining ownership and responsibilities.