You can see the pitfalls others avoided, the strategies that worked, and even how they handled setbacks.

By focusing on 30+ day stays, you don't run the same regulatory risks as well. 

Your STR Market Insights Report is comprehensive, but adding seasonality trends, regulatory environment insights, and a competitive analysis would enhance its value.

It can also be a huge set back when a bad investment is made.

If the unit has issues such as ingress/egress, bad electrical, is newly developed space without meeting minimum ADU setback requirements, etc then of course the jurisdiction can red tag it and enforce it.  

There might be setbacks and other building codes that have to be adhered to.

However, downsides include regulatory restrictions on bank lending, many institutions that restrict concentration and geographies, and other headaches and issues that arise when dealing with a slower-moving bank.DSCR loans are the option that has completely changed the BRRRR lending landscape in the last few years.

Much thanks to anyone who can weigh in with their expertise.There are at minimum 52 regulatory authorities involved with residential mortgage origination and servicing (50 states + DC + Federal).  

How can I best avoid such a set back? 

Making a bad decision can be a set back, but can lead to success.The beginning is always difficult especially without out any related experience.