Since you can't escape CA LLC registration, if the property is based here, and if you are a resident here, may make sense just to form a CA LLC and simplify your life and your costs.Most likely the state where the property is located is where lawsuits would be brought if they are something for personal injury like a trip and fall or something of that nature because the “cause of action” arose in that state.

Gone are the 42 yrs of falling interest rates where any Chimp with traumatic brain injury could make great returns in Stocks/Bond/Real Estate or any risk on Asset.

If the real property is in CA, you're definitely doing business in CA.Most likely the state where the property is located is where lawsuits would be brought if they are something for personal injury like a trip and fall or something of that nature because the “cause of action” arose in that state.

I worry of injuries as I have a re-occurring injury from the academy, so I want to start something to let me get out of this career early and defer the pension.

Also, in the rental agreement, it says:"HOLD HARMLESS AND INDEMNITY: OWNER of rental property shall not be liable forany damages and/or injury to TENANT and/or their guest(s), or their personal propertydue to TENANT’S acts, actions or neglect.

Gross negligence does not refer to acts undertaken with intent to harm another, but acts for which the perpetrator knew, or should have known, would result in injury or damages to another person.

Told this story here before, we bought a property where the seller had been in a bar fight and had a judgement for medical injuries from the other person in the bar fight. 

When you talk about liability you can offset that by making sure you have a good Insurance policy and close the loan in an LLC.LLC protects you and your assets from lawsuits and any litigation from any and all accidents/injuries.

Also, put any repairs pointed out by the inspector into the following categories (by priority)1) Health & Safety - to avoid tenant injury and potential lawsuits2) Property Preservation - to stop further costlier damages3) Government Required - city inspection repairs & S84) Marketing Negative Impact - who'll rent a house with purple bedrooms?

Let me address your concerns:The two late mortgage payments due to your husband's injury are understandable and not a deal-breaker for us.