It is a lot like a use and occupancy inspection, but a little more sensitive.

This works OK for relatively static and simple investments like a private placement or crowdfund, but can become rather cumbersome and expensive with a more time sensitive and transaction intensive asset such as a rental property.

What can be done to safeguard against it?

It’s difficult to exactly quantify and everyone will have a different opinion of what’s “safe” but we evaluate historical cap rates and the volatility of those cap rates as well as run a sensitivity analysis with changing rent growth and cap rates.

I used Brian Eastman at Safeguard Advisors. 

Install motion sensitive lights in common areas and bathrooms.

Condos are fine to invest in but they are very sensitive to a market turn especially with high HOA fees.

You have all of these people that wholesale product/services but when it comes to Real Estate people get sensitive!

And, you can always offset the security deposit for non-payment of the water bill since it is enforceable against the property at termination of the lease.Build in some safeguards to minimize the lien risk and let the tenant pay for their personal consumption.

That's how sensitive they are.