Cash-flow is for "keeping the lights on" as in covering operational expenses to defend against any need for additional capital investment. 

Yes you have insurance, but it may not cover everything.

If your property manager is not listed as an additional insured, they may not be covered under your policy in the event of an incident on your property, leaving both of you potentially exposed to liability.It can save you money.If your property manager is not added to your insurance policy as an additional insured, they may be forced to purchase their insurance policy to protect themselves.

My bookkeeping firm provides me with a steady active income, which allows me to keep doing deals, cover unexpected expenses, and navigate the occasional black swan event.

Umbrella Policies are good, but they are not an asset protection tool, they only cover litigation/damages after you’re already in litigation or found personally liable.

By adopting the house-hacking method—living in one unit while renting out the others—we plan for the tenants to cover the mortgage and gain valuable property management experience.

This would make a great co-hosting opportunity without worrying about making enough to cover rent.

I guess that's part of my question, if you could have the security deposit cover that and people's experiences so I could better prepare myself. 

I've had clients rent by the room short and midterm and covered their entire mortgage.

.- The bathroom flooring was covered in mold and needed to be replaced.- The kitchen sink was unsecured and fell into the kitchen cabinet.- My insurance was cancelled until I fixed roof issues.- Debris littered the recently occupied unit, the basement, and all over the back yard.As mentioned, we had an initial video walk through before the contract to purchase.