Any other ideas on how to ensure our funds are protected? 

Whether you’re dealing with non-payment of rent or other lease violations, this resource explains what landlords need to know to remain compliant and protect their investment. 

It's comforting knowing that you have some sort of protection there. 

No, you cannot create phantom losses this way.Some additional issues that we have not addressed:- holding rentals inside an S-corp has many tax disadvantages- you will likely jeopardize your $250k/$500k capital gain exclusion for homesteads- you will lose asset protection afforded to personal residences by most states- you will lose your homestead exemption for local property tax - your insurance will have to change from owner-occupied to rental, i.e. go up- and there's moreConclusion: there're reasons why nobody is doing this clever "strategy" but A+ for trying.

I think hard money lender to take this risk cannot legally charge appropriately which means the law is working against you (the law meant to protect owner occupied owners from unfair loans).I agree with @Jay Hinrichs that your best option likely is to sell on the mls.  

(8) no requirements in documents for purchaser to adhere to procedures to protect the seller? 

In fact one of the themes of my posts is dissuading investors from over spending on entities and asset protection.

I would have advised you against an LLC, most likely, contingent on your attorney's legal protection concerns.This is assuming that by "we" you meant your spouse.

My view is there is more protection on a wrap than a sub to and with the right disclosures and underwriting can be an alternative option. 

That makes your bookkeeping easier, and it can also provide liability protection if you hold title in an LLC.