My partner is a builder in the LA area and his client posed an interesting question for him that could affect financing in the future. 

If you expand your rental business in the future, an LLC may be worth considering, but for now, keeping good records and securing appropriate insurance should provide adequate protectionThis post does not create a CPA-Client relationship.

For what it's worth, I tried to run your numbers using the proforma I use with my CFO clients and I'm getting an IRR (average annual return) of nearly 23% (see page 2): Kalamazoo Properties

A client of mine in Maryland added smart home features to their rentals and boosted rents by 12% with minimal investment.

Usually I don't like to buy or recommend to my clients to buy where there is a lot of new constructions going on that don't have a cap on how many properties they sell to investors.

I do have a client with almost similar situation.

I knew that was not true because I had paid $780 a couple months before on a property in the same area and also my realtor told me that her clients had been paying that lower rate.

Your brokerage is required to supervise you, and maintain all records of the transaction, just like any other client. 

In my 25+ years of representing clients before the IRS, not once did the IRS ask to prove that the payments were actually made by my client.

I can tell you with confidence that Many of my clients have done both and it worked out.