Welcome to the community and be ready for a huge amount of information at your finger tips.

This active income can help me fund my retirement as well as help me get reimbursement for home office and health care premium while lower my tax liability.

Don't apologize, don't explain how the 'chosen' tenant was more qualified than they were, wish them well in their search.You're running a business and you've made a business decision. 

You have not documented these incidents, nor have YOU informed your tenant this behavior is unacceptable.  

The American Dream is alive and well in this country but you have to make it.  

While you should always consult a CPA and/or attorney for their professional advice, here's my 3 cents (I'm sure others will chime in as well):1) Having an LLC may make it "easier" to track but it's not needed in this situation as you can run this through your personal return just as well.

Quote from @Dustin Wilkes: Well hello there everyone.  

Found T&H realty services to be pretty interesting as they provide both buyer brokerage service (to help me find deals) as well as do property management i.e. they are not full turnkey provider necessarily, but reduces some of the hassle for me I guess as an out of state investor. 

Just got off the phone with another DIY landlord looking to hire a PMC.
They really didn't like our response to their question, "How long does it take you to find a tenant?"
#1 they were uninterested in hearing abou...

I have been looking at sf homes with comparable SqFt to one of the units, as well as the units combined to try and get a feel for what this is worth.