Many find a better route is building a fortress of insurance coverage. 

That's direction I'd advise exploring, not how to do it all yourself as an island, but as a facilitating power.

@Bryan Cavellier, You can 1031 with any US property including Guam, the USVI and ...drum roll- The Northern Marianas Islands (go figure but I actually had a realtor from there in a class of mine recently) into any other US or one of those territories.  1031 is a federal statute so it's applied the same in all locals with just a few variations state to state at the state level. 

We spent 2 months on Madeira last summer, and 1 week on Porto Santo and loved every minute of it so I'd like to get a few properties on the Island and eventually relocate there. 

I am wondering if there is any market in New Jersey, New York, Pennsylvania, Rhode Island, Connecticut, Maryland, or Washington DC that would "make sense" to house hack given my financial position? 

Have you looked into Rhode Island? 

Check with these guys, I live on Catalina Island which is High Fire Zone and they were able to help me.

Driving through Matlacha to get to Pine Island was particularly tough to see. 

I myself have a 1/1 apartment on Davis Islands near the hospital that I'm considering renting to traveling nurses.The problem with rental arbitrage is that you need leverage as the renter to negotiate assignable lease terms with your landlord.

Pete Beach and Treasure Island heating up, it might be worth tapping into that dormant potential.