Welcome to BP.My biggest piece of advice is to understand risk premiums in real estate.

When you buy a property at a time, the risk from the uncertainty is small.

We constantly get the comments that it is much better than it looks which I prefer.So here are some links to read up on the topic @Mark Mileshttps://www.zillow.com/learn/how-to-make-a-virtual-tour-for-...You can go over to - https://matterport.com/ and create a free account.

Even if the rental has a decent cash flow with additional flood insurance, we're still not sure we want to take on that risk as we are out-of-state investors (planning to move back to KY in the future, but not now) and we don't like that it will potentially bring down the perceived value when we try to sell it in the future.The seller has never lived there and has not provided any information on if it has flooded before or not. 

If you have any more questions, feel free to DM me.

Since you're in Destin, you might want to check with local firms that have experience with STR-heavy communities, as they’ll be familiar with the risks and requirements.

That way, you build equity and cash flow at the same time.Feel free to reach out if you want to run any numbers or talk through a deal.

While the debt would whip out most of the profit for 'x' amt of time, it would seem to be logical to take on the risk at a net zero income for x amt of years if after that point, the cashflow is all positive.

And as I explained earlier, your investment is protected by real property, so your risk is extremely low. 

But, like everything in lending, when you "risk layer" the rate/terms are usually a little worse.