If it's not included in the rent, many companies charge a flat fee to monitor & pay utilities.2) Assuming you're referring to resident benefit packages, renters insurance, and other charges for services the PMC offers to tenants. 

I relocated the tenants to an Airbnb for $1k while it dried out and the plumbing was replaced.

If your concern is liability, what I did was get an umbrella insurance policy on the properties I house hacked under my name.

Is there a type of mortgage insurance or bond you can get for owner financing that secures his position? 

Can’t you just provide your insurance company with tenant’s renters insurance policy info and allow insurance companies to hash it out?

This is a very common agreement, in your space your problem and they also should have insurance that if its extensive insurance would cover it. 

It was quite extensive, all new electrical, hvac, plumbing as well as foundation, painting, floors and yardwork and demo of shed.

Landlord Insurance: Get coverage for damages, liability, and rental income loss.This post does not create a CPA-Client relationship.

You can check their insurance coverage, any active lawsuits they have, their workers comp rate (how safe they are on the job site), and other metrics.

It's been sturdy as hell but certain things (like plumbing) were a pain to modernize for him.