It is legal and very lucrative in some parts of the US. 

It is an expense, but they keep it all legal and compliant.

Well, what would be happening is that your buyer would be buying your house subject to the existing note, since you can't legally sell the property without paying off that note or transferring the debt to the new buyer.

As for the legalities of setting up an LLC to protect you and your partners, I would consult with an attorney for best judgement. 

And if the government removes the app that the illegals use to get food, shelter, money and legal advice, then it becomes a whole new ball game.Regulations are slowing building down.

Legally, my investment is now depending on Aloha's action.

They legally have to have this document filled out if they pay you more than a certain amount over the period of 12 months.

Namely, that if a tenant (in this case accompanied by a whole family) ends up stop paying rent and I would be on the hook for both covering the mortgage and dealing with open ended legal costs and time.

What happens during periods when the demand for legal work is lower?

If you need financial help, ask under the "Finance, Tax, and Legal" forum.