Insurance- coverage for new engineering, permitting, etc8.  

Tahoe isn't ideal right now as the local community is vehemently anti-Airbnb and the permitting system is challenging to navigate.

The AP has to be open, notorious and hostile...those terms have a legal meaning and essentially it is that you as the owner have been fully deprived of your right to the property.Absent those items above, it sounds like at best they have another legal right which is a "prescriptive easement".

Also know that building a home seldom goes as expected - I have relatives that just built a nicer house… they thought it would take 9 months… it literally took 18-24 months between delays in permitting and the builder just not being able to get it done in a timely manner - often due to sub-contractor issues.  

The feedback I've received from people is that the legal side tends to be excellent. 

.: I haven't passed this past legal review so for what its worth: Part of my standard requirements for everyone include income is at least 3X rent, minimum credit score, say 640, Clean record and no evictions as well as deposit is paid in full at signing of lease and 1st month rent is paid in full prior to handing over the keys.

Good points.I'd add square, level, plumb - license, insurance, bond - using permits to follow codepointing out problems the owner doesn't realize they have that are serious. 

Legal Structure – Would this be structured as a leaseback or seller financing with safeguards?

In total, including money lost from rent, legal fees, and repairs, the situation cost almost $30k.

In a city like Philly, you will face many challenges - you need to learn the market and know the neighborhood and the block and make sure all of your numbers are within reason, you need very reliable contractors, you need a to understand the permit process, you need to be familiar with market expectations.