I want to know based off of other people's experiences what to look for during a due diligence period that could possibly help dodge a future lawsuit.

That would be far cheaper than not being able to perform and ending up in a lawsuit. 

Some will say you just need Liability Insurance, but there are tons of risks with that, since most policies will find carve-outs, limits, and flat out will tend to deny larger claims on technicalities that will have you fighting for your personal assets in court.With that being said, LLCs limit personal vulnerability to potential lawsuits related to the property(ies).

Even if you don't intend to shut out families, you are just one HUGE red flashing sign for a lawsuit from someone with an ambulance chaser lawyer....You should specifically read sections 803B (if you own less than 3 units) and 804C of the fair housing act...

They also have a limited lifespan of about 15 years, and they stopped making them in 1995 due to massive lawsuits against obvious defects and limited lifespan vs. copper and others.

The extremely low probability of the slip and fall lawsuit the LLC is suppose to protect you from isn't something I fret about.  

"Whitehall condo dispute costing taxpayers money"http://www.wptv.com/money/consumer/whitehall-condo...Fair Housing Lawsuit against Florida HOA https://www.justice.gov/opa/pr/justice-department-...Oh and in Florida as a Board Member you have to be "Certified" which is suppose to educate members on the Governing documents, Federal and State Laws, meetings and budget preparation.The problem is that a board member can still interrupt the Governing Docs, and Rules how they see fit. 

If you're worried about the platform and the project's sponsor colluding to do this I would think reputation risk and lawsuit risk would pretty easily be a deterrent for that.  

Courts in California are not owner friendly when a lawsuit occurs and tend to lean toward the tenant.

Also something to remember is if you do not have a policy written down and you "Pick and Choose" in the eye of the tenant you could be sued for a Fair Housing / Discrimination Lawsuit.. always put it in writing and treat every prospect identical...