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? 

Framing your position as fair such as explaining the difficulty of finding renters during off-peak months - might help maintain a positive relationship and reduce risks of property damage.Prepare for What’s NextEven if the tenant moves out early, ensure you’re protected.

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.

In these instances typically the lender will pay it to protect their interests. 

Also make sure to have owners add you to their property insurance policies, so you have liability protection. 

The tenants should have renter's insurance to protect you.

Work with a real estate attorney to draft a formal agreement that outlines responsibilities and protects both parties. 

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