Many people in consideration of #2, take steps to protect the assets so that Medicaid cannot take those assets like a home.

That being said, anything can happen, but if you run your numbers accordingly, make sure that your contractor is trusted and do all the other stuff you'll be a little more protected than the next person flipping that does not do this type of calculation. 

These types of agreements can get a little in-depth, but that is what you want for your protection and that other partner.

With some humility, I’d like to say it’s keeping the finances separated/organized and liability protections, or everyone’s favorite question… do I need an LLC?

Asset Protection Trusts don't protect assets?  

A well written management contract should clearly spell out what is expected of both the PMC and the owner, to PROTECT both and avoid misunderstandings.

A lawyer might be able to answer this better, but most rentals fall under fair housing laws (there are exceptions) and that protects against discrimination based on familial status which means children or someone who is pregnant.

Our 4th Amendment Rights as landowners protect us against regulatory takings and that is why lots that were created prior to zoning or zoning changes are typically grandfathered.  

Just because the costs might be in the furture does not warrant not budgeting for those known expensesThen there is the misc costs of asset protection, bookkeeping, unexpected utilities (such as between tenants (tenant turn over) or failure not attributable to the tenant such as slab leak).  

By not putting all your capital into one deal, you protect yourself from major losses and keep your portfolio more resilient.