EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

Additionally, there’s always a risk that any pet-related damages could be hidden under furniture or otherwise concealed, potentially leaving us to cover the costs if the security deposit is fully depleted by other expenses (e.g., damages or unpaid rent).

The other potential problem is the term of the proposed renter not sure exactly we are going to deal with their lease when it comes time to sell.  

2.What are the best and most cost-effective solutions for managing this potential long-term issue?

I'm hesitant to set a utility cap, as I worry that disclosing a specific amount (like $500) could deter potential tenants.

On the positive side, it seems like you have a good potential BRRRR that you can use to purchase additional properties.

Sounds like a good plan, should have plenty of options available.I would be cognizant of any group you talk with on two areas, the location of the property including any potential concerns of it being 'rural', as well as the minimum purchase price and/or minimum loan amounts.

If so, do you have any paperwork that supports the vesting to be able to show a potential lender? 

Umbrella insurance can be a smart way to shield yourself and your partners from potential risks that basic policies might not cover.From what I’ve heard, local insurance agents familiar with investment properties in your area are a great starting point.

As someone based in San Diego, I’ve also noticed that investors eyeing California real estate tend to focus on potential future development or expansion (especially if you have the patience to navigate local regs).