This has helped tremendously over the years to recoup damages done from the college students. 

I'm out of time on my hard money loan and I need to refinance, but credit is now damaged.

If you'd be in default where seller can sue you for damages above earnest money and real estate agents can sue for commissions, then you may want to consider those potential costs before making your final decision. 

If this is done incorrectly by a contractor without the relevant experience, licensing and insurance; it could land you in some hot water with regard to safety of your tenants, being financially liable for damage etc. 

If you transfer the deed to LLC and the servicer or lender calls the loan due in full, the friend's credit is damaged by foreclosure for four years. 

The house is mostly turnkey, with the seller having installed new carpet.However, I've heard concerning stories about tenants and their pets damaging carpets, even if pets weren't permitted per the lease. 

Put damage deposits and rental reserves in a high yield savings account or CDs.

Even a water heater replacement is usually listed as 1 hour, MAYBE 1.5 if there was water damage.

If that neighborhood demands having a garage...then you might be damaging your value and rentability by enclosing that garage. 

Also am I liable if the limb falls and causes property damage during a storm?