I'm all about finding problems to solutions and figuring out how to make something work rather than simply conceding that it cannot work.

Jay what you've got to understand about Josh is the fact he is simply lying.  

Simply look at any large apartment building.

Insurance would cover it, I would pay the deductible, and no assets would be lost.If you are in an area like San Diego where people are more likely to sue, a judge is more likely to find you guilty, and the payout is expected to be higher, you may consider an umbrella insurance policy.

especially no up front money to pay for set up . 

They simply want to put their money to work.

However, if you bought it and managed it as a market rate apartment, your experience would be very different.My point is, I can control how fast a unit turns simply by adjusting my asking rents.  

NOPE I simply do not believe that is the case personally..   

Simply fire them and hire someone else.

It simply means that you agree to let them perform a 1031 exchange which starts with the sale - not that you have to help them finish.