We will not insure a water balance unless we have the proper documentation (which might not happen within days of getting a contract signed)  How do you protect yourself? 

We’re on the same page about wanting everything well-documented and on paper to protect both of us and maintain a business relationship.

For example, if your property is owned by an LLC meant to protect your personal assets that could become moot because you are purposefully and knowingly choosing to operate in an illegal manner.

This is not the same as a conventional loan where estimates are many pages, sent before day three, resent when you lock, and again before closing to protect a consumer who probably only does a mortgage loan a couple times in their life.Hard money and business purpose loans send an email term sheet which generally tells you the rate and points which can change after the appraisal and details become real. 

Won't my tenants' renters insurance company just go after me/my insurance?Example: Tenant experiences a loss due to some house issue. Let's say that a pipe bursts and destroys their laptop. Or they trip and fall becau...

What kind of due diligence should I be doing to protect myself?

Since I vetted the tenants and regularly did property inspections we were okay with not having the extra protection of having it in an LLC.

Should I set up an LLC for Airbnb for protection?

You would be protected with an inspection and financing contingency in the contract. 

@Sandeep Shukla how much time do you have to manage AND learn:1) Fair Housing laws2) Fair Credit Reporting Act3) Consumer Privacy Protection laws4) Local rental ordinances5) State eviction laws and procedures6) Etc...Everyone thinks property management is easy until something goes wrong...