From my perspective it was way faster than going through the usual channels and I knew I wasn't going to be getting blood from that stone anyways.

"buy while blood is running in the streets" -Rothschild

Being in business means taking care of paperwork, paperwork is you businesses life blood when it comes to dealing with bad tenants.

This gets my blood boiling why am I responsible for something I didn't even know was broke and the tenant lied about cost (friend wrote receipt) and he  claimed he was displaced from residence when it was broke.Can I just evict him and terminate lease for other reasons other than non payment.

Tenants can smell the blood of a new landlord from a mile away and they will bite.  

Hey Bellingham Investors,Has anyone ran into the Bellingham Municipal Code 20.08.020.F that states a lawful situation for residence zoned as a single-family as "One or more persons related by blood, marriage, or adoption, or not more than 3 unrelated persons, living together within a single dwelling unit."?

In that case, with good documentation, etc that money CAN be awarded to you.Last but not least: the old saying "you can't get blood out of a turnip" may be true, but you CAN eat the turnip:)

However, there is a difference between retaining an agent (friend or not) to find you a warm blooded potential tenant, versus hiring someone to manage your property. 

. :)Is the non-occupying co-borrower a blood and/or marriage relative?

So many questions that are going to be dealt with in the Operating Agreement and an attorney will have the experience to give you good advice on what is good - and what needs to be changed.If this was a 30-50k deal then i'd be emphasizing the relationship to the operators and you could probably get by without an attorney, but in this case I dont think it matters if it was your own blood brother - 350k is a big first-time investment and its well worth the few hundred dollars to hire an attorney.