To simplify the existing lease I thought about asking the tenant if they would be ok modifying the addendums to get rid of the resident benefit package and the building protection plan. 

A combination of extremely tough long term tenant protections and the economics of short term renting being a lot more attractive. 

(Unfortunately, the investor fell for this gimmick and did NOT get their own 3rd party inspections, appraisals or even visit the properties they were buying, against our best efforts to encourage proper due diligence and follow our check list for their own protection.)So now some people are stuck with properties worth half what they paid (not all RWN members), with no renovation done, and constant repairs and vacancies. 

I use a channel manager (OR) and it has damage protection built in.

You certainly want to vet your property manager to ensure they are focused on balancing asset protection with tenant satisfaction.

Holding properties in an LLC (or other legal entity) can offer valuable protection for your personal assets, so I understand why you went that route.

remember, these are NOT conforming loans, so all the consumer protections one might be used to having aren't there.

While an LLC offers liability protection, it does not change how taxes are reported unless treated as a partnership or corporation.

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).  

How do I protect myself in this situation, while also helping a relative?