This case can occur if toxic materials like lead paint, asbestos, etc. used in the previous construction and need to be mitigated.

In order mitigate [1] the irritation and known adverse health effects of secondhand smoke; [2] the increased maintenance, cleaning, and redecorating costs from smoking; [3] the increased risk of fire from smoking; and [4] the higher costs of fire insurance for a building which allows smoking.B) Definitions. [1] “Smoking” means inhaling, exhaling, burning, or carrying any lighted or heated cigar, cigarette, or pipe, or any other lighted or heated tobacco or plant product intended for inhalation, including hookahs and marijuana, whether natural or synthetic, in any manner or in any form.

To further mitigate that risk, we have clients who layer their LLCs with a parent / sub structure which is beneficial for a number of reasons, including scaling a portfolio, entering into to JVs, etc. 

I than built established deals where I or my clients acquire the properties, and we lease to the STR operator on a long term lease deal, there in mitigating there costs of acquiring properties and frees up operational capital for operations and allows greater expansion.

Much like any other investment vehicle is is good to diversify your income streams and help mitigate risk.

The ways to help mitigate that is to use automation software which helps drastically reduce the time involved with an STR, setup a good team (cleaner, handyman, plumber, electrician, appliance, hvac person), and have an exit strategy if short-term regulation does come to that area. 

It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.Make sure your property manager is a licensed real estate brokerage.Google Clayton Morris and/or Morris Invest for a cautionary tale of what not to do when buying turnkey real estateUnderstand you can not eliminate all risk, only mitigate it.

You could also narrow your filter to properties that are elevated, or have FEMA approved mitigation measures (flood vents; filled-in basements, etc), which can all decrease premiums w some private carriers, it seems.   

They can walk away anytime and you always have a duty to mitigate your damages. 

Just like homes, you have to mitigate your potential losses: make sure insurance is in place and do some due diligence on the buyer.