This is due to the region's diverse attractions, such as hiking, water sports, and the allure of escaping the summer heat.

People flock to Bend Oregon but I think for things to do and water sports etc and no state income tax Wenatchee is pretty good choice. 

Comes with an out board to putter along but the truth is I would keep it docked/moored and get a small B-Whaler to use for water sports (not sure if i can mention website of company that builds and sells them).

Do I need any special homeowners insurance to cover the tenant if anything happens to them with water sports or otherwise?

Summer is about water sports.

Quite a few old Florida towns tending to quirky with fantastic water sport opportunities.