@Heather Bailey while I live in my duplex, I have a standard Hazard insurance policy and I also carry an additional 500k umbrella policy (optional); both policies cover the entire building, but there's no separating it. 

For example if you were to exit a new build in 5 years there may be no cap ex cost (i can think of few cap ex items that does not last 5 years - maybe carpet in class c and lower), just maintenance costs which would be fairly small.Best wishes

Make sure that your spouse changes some of the items.

Would you have any recommendations, in your experience, for what to look out for in the documents that would be red flags or items that would negotiable?

Due to item 1, adding an ADU can require years to start achieving any return (once the accumulated cash flow recovers the initial negative position).4) Adding an ADU is a slow process.

Moving into a flip is going to slow down the process and thus raise carrying costs.

DSCRs will have slightly higher rates and they also carry prepayment penalties, which kick in if you sell OR refinance the property within x number of years; 3-5 years is common. 

But, only because I have seen LLC agreements in lieu of PPMs, with the same general items discussed. 3.

The biggest win seems to be the fact that investors will be able to buy existing STR's and carry on with the business.

If your project incurs losses, they can help determine if those losses offset your other income or if they are carried forward.