First step would be to talk to the controlling government body about what you can do with it.

You are unlikely to get caught and the city governements don't really care.

I imagine it is all just on for now especially since all government backed loan defaults are a full stop too. 

The Federal Trade Consumer’s Bureau of Consumer Protection stops unfair, deceptive and fraudulent business practices by collecting reports from consumers and conducting investigations, suing companies and people that break the law, developing rules to maintain a fair marketplace, and educating consumers and businesses about their rights and responsibilities.In all other industries consumers are able to rate the performance of service providers and potential investors have a right to have these insights.

I am happy to talk smart contracts, governance and funding though. 

The focus of government policy (regardless of how local) should be on addressing fundamental friction.

Property managers ensure compliance with local, state, and federal regulations, reducing the risk of legal disputes and penalties.7.

Some of the simpler asset protection solutions would include the following:  having max funds allowed in qualified retirement plan or IRA rather than personal as retirement plans are exempt assets in Federal and most state bankruptcies; investing through an annuity if your state (Florida and Texas for example) exempts insurance policies and defines annuities as an insurance policy; taking advantage of maximum homestead exemption in your state; use of corporations or more popular LLC or Series LLC to limit liability to the entity holding the asset; reasonable liability insurance if available; separating asset ownership from asset management; etc.I can design a simple, cost effective asset protection strategy of up to about $5million with little cost IF the individual resides in Texas or Florida.  

Quote from @Gerald Jarreau: Is there a government agency that will need to certify the rental as mold free?

Also, there's the added risk of being compliant with federal regulations & state laws as well as properly assessing/vetting both the borrower and the property.