A lot of people like to tout that private lending is this risk free business alternative to owning your own investment properties.

Reading the old posts on this STR subreddit for a bit, I see it's not uncommon for people to want this parameter for their STR property. 

Be fair and nothing more

I think insurance companies have become more risk averse as weather events increase.

Houses have flipped on my street for $MM - bought at 400k and sold at 1.7M or bought at 800k and sold for 3.2M, etc...We can either add a second floor and invest a lot (OPM) and sell or invest a little (our equity) not add a 2nd floor and rent it out to keep it for future sake.

Sometimes they get away with it, sometimes not.I think building a whole suite in the basement will be much more noticeable than just a bedroom and they will probably call you on it if it is not permitted.

Should I look for an internship to learn more about the flipping or investing industry, or would it be beneficial to use my license and work as a buyer/seller agent under a family friend's brokerage?

How do I decided on length of term...2 years, 3yrs or more?

Surprisingly, this small town in Oklahoma had a lot of data that says yes. 

Second, the more equity you have more more your properties are a potential target in litigation.