However, it takes 7-10 days (which is longer than Zillow claims) for me to actually get the payments. 

The concern he had and to be fair he said he needed to research it (i am just doing some of my own) was that since most of the work and hours will be conducted in LLC now and the LLC does not own the property would that create any issues with my ability to file a schedule C and claim depreciation and losses, etc?  

God forbid someone tries to claim you violated fair housing for denying them, you can point to your criteria and where they violated it and it had nothing to do with a protected class.

-If we sell after year 2, do we claim 250k(yr 1) and 125k(yr 2 with half the house rented) for total deduction of 325k gain? 

Your claims do not line up with our track record nor our business practices.

Only one filer can claim that property if you read all the requirements. 1031 exchange would require all of the partners to agree on moving the proceeds to a new property and deferring their gain.

You are going to want to file a claim against Person B and hold Person B accountable for the damage.

However, I suspect they need to be billed with some time to pay before they could claim they were "unpaid" and a reason to evict.

Get on the record with all that she claims and has said to you, and give your side. 

The hurdle you will run into is that a purchase money loan (mortgage, car loan, etc.) is a preferred status under the law and will take priority over other debts and claims against your assets.