LLC offers better legal protection.3) Setting up in states that allow your identity to be hid is also overblown.

In 30+ years we've been sued 1x (legal blackmail over a tenant's drunken trip/fall) which the insurance company settled for $1,500.00).We've been using some privacy tactics to keep our names off the county recorder and the target off our backs.Further, we review our insurance coverage and premium annually, just to keep on top of any changes.As with all insurance, it seems to be a waste of money... until you NEED it!

I agree with the others when they say to hire a PM; a property manager will have access to better screening and fraud detection - and hopefully can add some protections in the legal arena too.

Quote from @Stylianos Kalamaras: Yes they are, they cost me $800 knowing they would not close my deal and waste my time, if I had any possible legal recourse I would take it they shouldn’t be allowed to operate it’s really sad.  

I will preface this with the fact that I have a legal background, specifically with estate planning and asset protection.

And the cost of legal defense , even if successful, will drive the company out of business.   

Are there other legal or financial consequences I should be aware of?

My point is cash has no exclusivity on being legally clean and far from it.

.- but the advertising company still gets paid.He has to pay for accounting services, payroll services, tax services, legal services, etc.- they all get paid whether he makes money or not.So, what's your point?

Owner ended up settling with the tenant, but then we had to threaten to sue our own client to get them to pay our legal fees.- Owner must sign a Hold Harmless to indemnify us against any potential tenant lawsuits relating to the work their contractor is doing.--- Another lawsuit resulted from owner's contractor taking down basement handrail to get supplies down the steps, then they didn't put it back and tenant fell down the stairs.- We also negotiate a reasonable completion date, depending on the Scope Of Work (SOW). --- Who gets all the phone calls and wastes time calming a tenant down because the owner's contractor doesn't show up as scheduled after they took time off from work or a 3 day job takes 3 weeks?