You put RTO in it, they destroy the house, and then you're in a worse position 3-4-5 years from now when there is little appreciation and the house is destroyed.

And a bad tenant, primarily one that destroys a house, will also cost you a LOT of money (and put you back into renovation mode again).  

Even with good communications between first and second .. first many times just wont answer ..

Tenants wont be hard to find like you mentioned but mindfulness on the protection laws in the process will be important.

One block can perform very well, and another block will destroy you.Before you invest, I recommend you locate a quality PM that can help you narrow down markets, determine which rentals perform best, cross-check sales prices and rent rates, and take over management right away.The biggest mistake you could make is to get talked into buying in the wrong neighborhood and then learning that the good managers won't touch it. 

And……I have seen great real estate locations become destroyed by bad management. 

But then my LLC will need a down payment and I wont have access to the equity right?

Another advice I have been given is "just be a good landlord" but that doesn't protect me against crazy tenants and ambulance chasing lawyers who would be happy to destroy my life. 

We have since won that lawsuit andthe judgment will destroy that client financially for the rest of his life.

they wont.. as you noted you need the relationship first.. buying courthouse steps is uber risky for those starting out..