But as I'm seeing now even after the most thorough application process it's possible to get a bad apple. 

Unless shes a home run in every other way, that's a big red flag that may be enough for me to look to another applicant

Insurance companies want you to be proactive to limit the amount of damage that occurs.Have a contractor assess the damage inside and out and provide you an estimate. 

They also have to have an income higher that what would be required for their mortgage application because they also have to be able to cover their monthly option payments.Another value add for the tenant buyers is that some actually can qualify for a mortgage right then and not need the RTO solution. 

From my limited reading it simplifies things at tax time and offer a layer of asset protection.

I think each one should have their own LLC partnering into an LLC for these type of endeavors.You need to read these threads:https://www.biggerpockets.com/renewsblog/effectively-conduct-joint-venture-agreements-as-a-real-estate-investor/https://www.biggerpockets.com/forums/48/topics/596231-how-do-i-properly-construct-a-purchase-with-a-partnershiphttps://www.biggerpockets.com/forums/51/topics/591376-create-an-llc-for-first-partnership-best-way-to-do-sohttps://www.biggerpockets.com/forums/51/topics/526244-taking-on-partner-s-and-limiting-our-liabilites- one base idea of asset protection (and LLC) is to separate your personal affairs from the real estate investing.

If tenant brings you a qualified applicant, and you turn him down, they can claim you are not working to mitigate your loss.

Throw an ad on craigslist and Zillow and see what you get, if you find people are interested then show them the property and have them fill out a rental application.

Credit score must be a minimum of 600.A background check will be conducted on all applicants over 18.

By buying Stocks they have limited themselves and tied up their investment money in a poorly performing asset.