Do they use a servicing company to make the payments directly to the , or do they make payments directly to the seller and hope they pass them on to the lender?

Kyler, call your a couple of insurance companies and get a formal quote so you can take this back to the seller.  

Namely, that if a tenant (in this case accompanied by a whole family) ends up stop paying rent and I would be on the hook for both covering the mortgage and dealing with open ended legal costs and time.

Do you have a property management company you use? 

The nuances in state regulations require an expert who understands how to expedite the process within the legal framework.

I do all accounting for properties and company in Rent Manager. 

.: Is it legal, per the IRS, to rent my primary home back to myself? 

Leverage the Power of LLCsEstablishing a Limited Liability Company (LLC) for your real estate investments can offer both legal protection and tax benefits.

That's the reason there are so many fourplexes and so few fiveplexes or even sixplexes.From what I gather, post offices and utility companies rarely care much about the permitting/zoning issues, so it probably wouldn't have been hard to get those set up.

@Dwane Twente so this is basically a rental arbitrage company.