However, you would also need to increase rent by 4% for year 2 since the team builds in a 4% rent increase year two. 

When asked about it and if in his opinion we should build more “affordable / workforce housing.”

Lately he has bought local restaurant businesses, primarily, but also apartment buildings, land, MHPs, and other commercial properties. 

remember payments may only be 400 a month at best.. 6 months reserves is a whopping 2400 dollars.. so someone theoretically with less than 10k in cash could get into these properties.. this William I personally think is highly dangerous for lender and for buyer... its not losing the 10k that's nothing its getting your personal credit trashed when you can't make the payments because you lost all your cash.IMHO if you want to be in the rental game you need 20 to 30k liquid at anyone time that you don't have to borrower etc.. this will insulate you from taking a loss. as you build units of course its not exponential but you need a base.And since this is not TRUE cash equity only paper equity there is no hope of selling them for a profit or what you have in them.. 

Considering the ever-evolving landscape of Short-Term Rental (STR) regulations, What are the best 5 states in your opinion to build a STR portfolio starting today? 

However, once I get my own home purchase out the way, the next move is to start building a rental property portfolio. 

I personally have 12-doors there and focused on the BRRRR method when I was building my portfolio.

I would suggest googling (or using Instagram) to find designers in your area that fit your style and visiting their website to see what services they offer.Another avenue is to search for interior design "build recipes" or "design recipes".

Should I continue to go with them, or should I try and keep communicate with him to include those expenses in the analyst? 

Ideally this is research you perform as part of your underwriting when deciding to build the JADU.