Hedges against malicious and fraudulent lawsuits.

If you reject a tenant based on any of the protected categories you could face a discrimination law suit. 

Otherwise if the property is owned by you personally and the rental agreement is to the LLC then you would both be parties to any lawsuit and potentially both parties liable if liability is found against you.  

What would happen in an actual major lawsuit situation, I can't say, and I am getting to the point where I will probably go the commercial route myself soon as keeping up with many insurers is something of a hassle.

This is a  "Subject-to" transaction, hopefully using two notes.A seller is willing to take I/O for 20 years is probably 1 in a thousand and they will be taxed just as Greg is, make that 1 in 10,000.I'd bet Greg doesn't mention the other issues with a Sub-to, foreclosure, Greg can only foreclose on his interest, that could be paid off, the note to the first seller is pretty worthless, that can end up going to the state in a medical issue, then there are risks of bankruptcy, law suits by other parties, collections and servicing, deed transfers, insurance, liens and the list goes on, which is why you should not do long term subject-to deals.      

You might look for a property with some type of in-law suite with separate entrance and rent that out (or live in it for a while).

How many evictions have they had to do in the last 2 years Are they currently involved in any lawsuits What type insurance coverage do you carry?

I always figure it's better to be on the safe side and disclose too much than end up in a lawsuit. 

Sorry for the long post...I own a large duplex. Both are rented to long term  section 8 tenants. One side is drama free and the other always has something going on. Not a high crime area but the police has been at thi...

Class action lawsuits, and regulatory action are usually catastrophic to those of smaller size.