I imagine a situation where you rent an expensive piece of machinery, and then their employee damages it, and now your left trying to collect from their insurance while being on the hook with the rental company.  

Both me and my spouse are salaried employees with W2 incomes.Based on the above numbers, what will be the basis for rental depreciation?

If they are hiring 1099 employees that is between them as every contract I have is written they are to have insurance and provide a copy of their insurance certificate

This has been said, you are certainly not obligated to pay extra because they are not your employees.

Have done tons of research into taking loans etc, but probably settling on getting 20% DP and 6 months worth of monthly costs (maintenance/mortgage/utilities).Started looking to my state laws and saw I need 3 years experience to even get a MN broker license and was wondering how I should go about that.Does that mean I have to sell houses or is there a way to become an employee under an existing property manager?

I want all your repeat business, I want your friends and family business, I want your bosses and your employees business. 

I have considered creating my own Property Management LLC to do the work above and hiring my dad as an employee, however, I was told this would provide no benefit in terms of liability and it would just add costs and more taxes.I would appreciate your feedback.

I either have my employees do it or paint myself.

U NEED your W 2 to qualify for loans full stop.. as your starting out. so just be realistic time freedom can come with a switch to full time RE agent you will get more free time but RE is very very tough.. and once you go self employeed you need two solid years of tax returns to qualify for funding..

True, you eliminate residential tenants, BUT it is a real business with employees, taxes, etc etc etc.