I think you are best served to get the best advice and that is what will make your business work much better than the ones who don't care about the regulations.

I'm very surprised that the government has no regulation on this!

Supply side is also limited by regulations and cost efficiency. 

Those enormous tenant buyout amounts were feasible before the 2019 rent regulation act. 

These carriers are not profitable in CA and CA laws and regulations do not make it easy to mitigate these financial struggles. 

You can - 1) establish a trust for asset protection, 2) utilize the Homestead Exemption for property protection, 3) consider tenancy by the entirety for marital property (this might just be applicable to California, my home state)4) make sure you have adequate liability insurance for additional protection, 5) think about forming a business entity to shield assets, 6) and have proper estate planning for asset distribution.Seek tax and legal advice from experts in your state.

One of the concerns would be, how long would this last until regulations catch on?

Where Were the Regulators?

Problem was it's a common perk for Chinese restaurants to provide lower paid staff with room and board, and without the upstairs apartment, renting an apartment in nearby towns for staff is a problem with rooming house regulations beside a major expense.

And therefore competition among tenants can create significant challenges, like...Businesses may struggle to establish a unique presence and loyal customer base, and a lack of profitability due to nearby competition will likely lead to higher tenant turnover.