With an inspection, if it was something that was known to the seller, they may have priced the home accordingly (eg older roof, price lowered to cover cost of new roof). 

If, for example a judgment is rendered in 2014, it probably only covers through 2013 since the 2014 taxes aren't even due until the end of 2014.  

I need a second mortgage to cover most or all of the rest.  

Interested to know how much you pay property management companies for covering escrow services etc.

Insurance would cover it, I would pay the deductible, and no assets would be lost.If you are in an area like San Diego where people are more likely to sue, a judge is more likely to find you guilty, and the payout is expected to be higher, you may consider an umbrella insurance policy.

More control over expenses, including what would've been a cap ex in MFH becoming a NNN expense that tenant's cover, or at least a percentage of them if leases are properly structured.

@Ivana Ivanovic I would say 8% is low to cover both vacancy AND repairs.If you expect to incur just one month of rent lost every 12 months, you'd be looking at an 8.33% (1/12 of gross annual income) vacancy rate.And, even for a brand-new build, you're going to have some repair/maintenance costs as long as you've got human tenants.

If their kid was on a breathing machine, they would need a lot more than $600 to cover the expenses.

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years.