There's many other options in real estate such as syndication and note investing depending on your level of involvement. 

This negative equity position is one of many reasons that adding ADUs in a single family zone is not typically a good RE investment.OP whatever you decide to invest in, make sure you do thorough and conservative underwriting. good luck You’re right in that the level of underwriting I presented wasn’t institutional level - but for your average person just starting out, institutional grade analysis often makes the thought of investing overwhelming.

HD actually has another level above pro. 

After looking at a lot of them, I would probably only be interested at 40 rooms or more due to staffing levels. 

IF that is the case full stop - yes you are paying for something called insurance but if you have a claim the company has the right to pretty much deny coverage for having the wrong type of policy.Landlord policies are higher cost but for a reason - there is a different and increased level of risk when the house is not owner occupied.Talk with your agent and get all the details sorted out. 

Your main concern should be whether these bedrooms and bathrooms on the lower level are legal and have the proper egress require for fire code and livability.

Level up and run some numbers--maybe a different market will reveal itself. 

I would recommend getting this level of detail from whoever you buy from.

It's great for managing at the property/unit level, but unfortunately, falls short on managing finances big picture once you add more property.

Having a mortgage and your normal STR insurance is already 2 levels of protection.