I am thinking more from the insurance and future liability stand point.

I think one of the biggest risks you face with Cash Out is interest rate risk.It's really difficult to predict where interest rates will be in a 2-5 year time period, so it can also be challenging to model out future mortgage rates.

Nobody has a crystal ball or knows what the future holds.

From a credit perspective, house hacking also helps you build strong cash flow, which can make it easier to secure financing for future deals.Additionally, if you're targeting high-appreciation markets, you could also look into cash-out refinancing down the line to pull equity and fund additional investments.

If you don't have those type of clauses in your lease, you might want to add for future tenants. 

I do not know enough or want to look into it.I will take this another direction though - should they actually rebuild those homes or should they re-evaluate the area and implement a plan to properly zone and master plan those areas to avoid this in the future.

As others noted, most municipalities issue future zoning maps which indicate the direction the local planning commission or equivalent wants to take their zoning and if your plans are consistent, that's generally a good indication as well. 

Use these insights to refine your approach for future deals.

The Pacific Northwest is competitive, so leveraging those connections can be a game-changer.Second, when analyzing deals, ensure you’re building a framework to assess not just the property’s performance today but its future potential.

Consider your financial situation and future plans.