The basement area is huge, great for potential rec room or in-law suite.

You don't want to be caught holding the bag when something falls thru, and lawsuits or fines are being thrown around.

The far side of the house already had connections in place that would make it really easy to add a mother in law suite, in addition to a separate entrance.

Will depend on several factors like the type of property, type of tenants, your risk tolerance, other assets you own, your estate planning, laws where the property is located, etc.Any lawsuits would be limited to the assets of the LLC and not your personal assets (assuming you run the LLC appropriately and the corporate veil is not pierced).

As we continue to grow, we get more concerned about a frivolous lawsuit of some sort causing us a big hit in the future. 

The other owner had to threaten law suit to get them to roof it.  

Manageragrees to rent and to lease the property; to sign, renew and to cancel rental agreements andleases for the property or any part thereof; to sue and recover for rent and for loss or damageto any part of the property and/or furnishings thereof; and, when expedient, to compromise,settle and release any such legal lawsuits or proceedings.

Formal quote or contract in writing with clear and detailed expectations of each party.Check WI contractor licenses: https://app.wi.gov/licensesearchCheck for judgments, liens, lawsuits: https://www.wicourts.gov/casesearch.htmCheck LLCs: https://www.wdfi.org/apps/CorpSearch/Search.aspx

I don't see Mpls banning STR's completely, first off they legally can't as long as other hotels etc. are allowed to operate, and they know that, it would be a mountain of lawsuits in a flash and i suspect that's why they placed it as close to that as possible, 1, which is still just a matter of time until it's challenged and struck down for targeting a specific segment of an industry to choose losers and winners. 

What about when you need an attorney to file a lawsuit?