I currently live in Vermont, but am more interested in out of state investing in growing secondary markets, primarily in the south and midwest regions given the lower purchasing costs and property taxes, as well as the ever shrinking population in the state of Vermont.

You can try to force tenants to purchase renters insurance if you want, but that will shrink your pool of candidates. 

That is not projecting the housing market crashing significantly but you would assume during a recession, or period of slower economic activity, that the amount of people buying houses would shrink which should lower demand.

Got to put the green backs somewhere lest they shrink before your eyes.

When dry, it shrinks. 

Most prospective tenants that you'd want in your place have their own furniture already (or at least their own taste, which may be different from yours), so with a furnished place, you're generally shrinking your pool of applicants a bit.

With Providence recently passing the law requiring AirBnBs to either be owner occupied or outside residential zoning districts, I wanted to explore the option since the supply of STRs should be shrinking to see if it would be worth the added turnover and management.

Investors shrink their portfolios, the result is fewer places for renters to occupy. 

The larger you go up in price the smaller the buyer pool shrinks so can get a little better cap rate and also better loan terms ( more lenders compete for larger loans as it is less to keep track of for servicing volume and locations tend to be stronger for higher priced properties.)My clients sign exclusives with me because it is a considerable time investment on both sides to work to achieve the common goal of effectively finding the best property in the buyers range to purchase that meets their quality and cash on cash objectives.The STNL market is fluid and the good properties go fast ( typically in days to 1 week max).

So it has caused primary lease terms in some cases to shrink from 15 to 25 years to 10 to 15 years.With a newly minted lease the developer usually wants the LOWEST cap rate on sale because they have short term capital gains tax, legal fees, real estate commissions to pay and they have not hardly made any cash flow off of the property.