Next steps are to put down a roll of plastic to prevent moisture or wet floors. 

Same thing happened where I am in areas where there were fires that destroyed towns or in areas where hail storms are more frequent.As for blame, there is no point blaming anyone, just learn from what happened and try to prevent it again (not fires because they will happen, but things like running out of water) or reduce the damage if it does happen again at that scale. 

I keep mine a little below market to prevent turnover.  

You may not collect anything, but it will sit on his credit report and prevent him from getting a car loan, home loan, or scamming another landlord.

It drives me crazy when I hear these stories preventive maintenance is what should be practiced and discussing all avenues of the deal and the borrowers docs in advance.   

Having a strong understanding of your "walk away" price (maximum you're willing to pay) gives you leverage and prevents emotional decisions. 

These rules are designed to prevent borrowers from repeatedly using FHA loans for investing.

Because you state your goal is to prevent liability I don’t think the LLC will do you any good.

Landlords can enter a tenant's property for a variety of reasons, including: Making repairs or replacements Responding to a tenant's request Removing unauthorized window coverings Preventing waste of utilities Changing filters, testing, or replacing smoke detector batteries Inspections Helping with an emergency inside the unit Posting a notice of eviction"Research your state laws because some of your comments indicate a lack of understanding of the landlord/tenant laws where you are operating (like threatening the tenants to keep the security deposit if they don't respond to you, I doubt that is actually a valid reason to keep their deposit, or evicting for late payments, or charging the tenants for your warranty repairs because you missed your 11 month inspection window which was your responsibility, and it looks like your lease says you can charge up to 18% interest for unpaid fees, is that actually legal?).

However, we are hoping to continue our investing portfolio where we currently live and have a lot of equity tied up in this home, preventing us from moving forward.