You're spot on with the tax liability. 

I understand there are many limitations to short-term, or even mid-term rentals down there now, but hoping to see some insights on areas where I might see more of a demand. 

Want to understand more about tax issues, liability, and asset protection regarding investing in real estate.

I live in Seattle, WA but due to the limited inventory and high prices I want to invest out-of-state.

If you have wall thermostats in the home you can also consider putting in a thermostat which limits the temperature the heat can be set. 

I tend to focus so much on the seller’s situation that I sometimes limit myself in negotiations.

Ok, not completely closed; they allow you to push data in, but then your stuck to see and manipulate in a very limited way.For me this is a deal breaker because if you can't quickly and easily check on the health of your business, you are wasting time and stifling your growth. 

I believe the standard vehicle liability is $300,000 while the average settlement is less than $60,000.

I am 99% sure its not an issue, there are other STRs within city limits and so is my property.

This way the buyer doesn't feel like an added cost is unexpected and at fault of the seller who is turning over the property to them with potential liability.