After a couple of years, the carpet on the stairs was damaged and had to be replaced.

Probably 9 out of 10 people who I know that have tried investing out of state have run into the same problems: turnovers costing too much, cap ex, tenant issues, management issues, etc. have erased anticipated cash flow and they have ended up losing money every month instead of making money, then sold after a few years.

Your insurance company will go after theirs if they are at fault...they do all of the work which is why you pay them.

After you get that first one, I would start looking for BRRRR strategy, and if you have time to market direct to seller you can try to negociate seller financing and sub to deals. 

-Management is low - you'll need at least 10% plus leasing costs - typically a month's rent for each lease-up, and sometimes a renewal fee as well-Insurance seems low-Are taxes accurate? 

@Michael James Hamlin I'm a former tax accountant/business consultant turned fix n flipper and investor friendly agent. 

After two years your only profit will be the education you gained. 

Even with a shared bathroom and living room, your place is likely much nicer than the average extend-stay motel, so if your rents are competitive, then you can likely serve this avatar.You may find that a 5/2 is an acceptable temporary housing solution for a family displaced after an insurable loss (fire, flood, etc.).

From a tax standpoint, there are additional disclosures to make when selling a business asset for less than fair market value to a related third party. 

Doing great after right hip replacement.