Appreciation MAY offset the cashflow loss.

If the rent payment covers your mortgage and you have a good tenant, why would you get rid of them to take on the expense of unit turnover, because you will have to do one, and the 5% vacancy loss just to increase your rent $150 per month?

The landlord policy will usually address liability and rental income loss for the rented unit, while the HO3 covers your personal belongings and liability for the owner-occupied unit.

Our program offers a range of coverage levels, including basic or special form coverage and actual cash value (ACV) or replacement cost (RC) loss settlement methods.

Hopefully you sell if for enough to be able to walk away without a loss.

You may be profitable, but I'd prefer to avoid the possibility of having to do unnecessary repairs or not holding my tenants accountable for damage when I know their actions might have caused any unforeseen damage. 

When you add up legal fees, lease fees, loss of rent, etc. it can add up.

Mid-term is more likely to work in any market than STR, but I think you would be surprised at how well an STR could do if there are no other options like that in the area (think people's parents or friends coming in for the week(end)).I've seen a lot of people grimacing at the net-negative house hack (it's just a product of rates and low inventory in a lot of markets) and this is one option to try to recoup some of that loss.

If there is no initial agreed-upon amount, determining a fair compensation becomes more time-consuming, leading to further losses.

BEST DECISION I EVER DID WAS MAKE MY WIFE MY BUSINESS PARTNER THIS YEAR FELT LIKE NEW BEGINNINGS LEAVING A OLD PARTNERSHIP AND STARTING A NEW ONE LITTLE  DID WE KNOW THIS FLIP WOULD BE THE WORSE THING WE DID THIS YEAR TALK ABOUT A HOUSE THAT WOULDN'T STOP SPITTING OUT PROBLEMS FROM SQUATTERS BREAKING IN , FROM THE CITY CONSTANTLY GIVING VIOLATIONS, WE EVENTUALLY TOOK A LOSS OVER 50K OUCH!!