I was planning to use Rigid Core LVP light color for main living areas for both levels & carpet in all bedrooms & 6 step stairs going up & 6 step stairs going to basement. 

In particular Pro Forma provided by sellers are likely to put things in the very best light possible. 

A good resource is the Journal of Light Construction (JLC) and Fine Home Building.

I've raised the rent about $150/mos above market rate in light of his making a big premium and the fear he may request more frequent repairs.

I would not treat entering in one lightly, especially if you have an option to try it out first ...

Hot housing market means hot landlord's market (although note of the rent control possibility coming to light in San Diego). 

In light of all this, I'm wondering if I'm overanalyzing or waiting around for something that may not come?  

I would get the right people to green light the safety of removing it, and not just trust my own judgment. 

And while it sounds all "tough guy" to say you or your cronies will keep mum when the IRS asks questions.....that is not what happens in practice when they shine the light on you.Tracking source of funds to a separate LLC that you funded in  a "private" state - even if it is "owned" in "someone else's name" (aka via a nominee) is easily done if you are the IRS. 

No mortgage, no existing tax liens, the house would need light repairs (paint and maybe floors).