Babysitting seem to be at the low end of the scale and as long as insurance has you covered, the risk/reward ratio may dictate to let the good tenant to do what she is doing.

This is unlike a registration system where the framework dictates what you can and cant do.

@Sarah Lewis Upfront, let me acknowledge that a I not familiar with tenancy law in CaliforniaThe answers to many of your questions will depend on what is contained in your lease, and what the tenancy law in California dictates.  

The type of house (size, updating, rent charged) for the most part, will dictate what type of renter you'll get.Wishing you success!

And you need the ability to get a several months of expenses via liquid investments or a loan (heloc/credit card/relatives). some of these options are superior to others but your risk tolerance and financial situation will dictate your approach.

Which would dictate the purchase of 1-2 more multi-family property with cash, hold a small cash reserve, and the remainder would go in to Vanguard stock index fund for long term... 

When it comes to self storage Product Mix along with a Demand analysis dictate your risk.  

Depending on the size and scope of your real estate investments would dictate what makes most sense as to whether get an umbrella policy or an LLC.  

Business entity - probably LLC - with a well written operating agreement that governs each parties' rights and obligations, management authority, spells out how money is spent and distributed, dictates how decisions are made and what type of consent is necessary for different types of decisions, includes buy-sell provisions in the event of a dispute, death, divorce or disability, etc. etc. etc. if you decide to own it individually as tenants in common, you need a property management and ownership agreement that addresses similar issues outlined above.

When you say in Del Valle - I presume you mean in Travis County. if in fact, it's in Travis County, and assuming there are no current deed restrictions on the property dictating otherwise, you will most likely end up with subdivided lots with a minimum of 2 Acres, based on doing septic systems and wells.