you don't even know me... don't judge people you don't know... this is not twitter  

By the time an Inspector shuts down a project, and the homeowner goes to court/city/judge/whatever.....there is wasted time and money.As we all agree, just get a permit (if it is required) and do things right. :-) Even if you win the war, loosing the battle can easily wipe out all your profits and more.Think about that recent CA AirBnB case where the lady was in the guest house for almost 2 years with no rent?  

That becomes a "he said, she said" in court and I'd bet most judges would side with the plaintiff. ;-)

It also isn't enough proof for a judge in small claims court, if you decided to file on the guest there - you'll need your own rental agreement.

Build an SMB on top of your real estate (the reverse of #2)Short-term rentals and high owner-participation real estate businesses can have great returns.Obviously not for you if you just want passive RE.We are in the deep end here, where each case should be judged on its own facts and merits by your CPA.You should hire a professional to review your particular situation before you make an investment.

Forget about the late fees and payment plan, you'd be lucky to find any judge who would enforce it when the tenant showed they weren't even living there any more and were still doing their best to pay off the balance. 

Insurance would cover it, I would pay the deductible, and no assets would be lost.If you are in an area like San Diego where people are more likely to sue, a judge is more likely to find you guilty, and the payout is expected to be higher, you may consider an umbrella insurance policy.

The situation you are ultimately trying to avoid is the one where: the borrower defaults, you start foreclosure, the borrower fights the foreclosure and says they didn't understand the loan / could never afford to pay it / you didn't follow the consumer rules, etc, then the judge asks if you followed those rules and you can't show that.... 

I had tenants who had not paid in seven months and we had been to court twice before and the judge said, "they said they are trying."

If you attempt to go to court, the 30 days repayment is most likely what the judge will grant in my experience.