For security deposits, a State Fund may compensate you for this and put a judgement on that property manager. 

The transactions should be:Investor -> Wholesaler -> SellerBut my contract I had wasInvestor -> Seller To try and compensate he then sent me a copy of an assignment which I refuse to sign since he needs it signed by the seller.

The deposit is often refunded at the end of the rental period IF it was not used to compensate the landlord for damage or repairs.I agree with others that I'd look for another reason to decline.

One risk management piece of advise, do not let anyone (especially a tenant) do work on the property without giving you proof of Liability and Workers Compensation insurance. 

You should offer compensation for the service.

Last year I adopted the Profit First System (Mike Michalowicz) and use the following accounts to manage my business: Operating Expense, Bonus money, Owners Compensation, Tax, and Vacancy/CAPX/Repairs.

Again, other might feel differently here.b) Skin in the game: as a conservative investor, I understand that the dirty secret of industries that the waterfall compensation is in the line with me and incentivizes sponsors to take more risk.

Profit sharing plan can shield around 60k of income. 3) Hopefully, you/brother also have IRA and HSA to decrease your AGI. 4) You can lease the property to your corp allowing withdrawal of cash from the business that is not subject to FICA (rather than paying yourself a compensation). 

I also fear if I do a lawsuit, they'll just increase HOA fees to compensate.

Is it enough to compensate for the potential brain damage of self-managing section 8 tenants?