PM takes out money for property operating expenses and their commission - and then sends check to property owner. 2 questions:1) How does PM ensure each property's funds go directly into each property's account?

Quote from @Antonio Chelala: You are responsible for maintaining the home to ensure it is functional and safe.

No one has yet chimed in on stabilization and ensuring the property is rented…Unfortunately, it’s rather easy (or at least easier than it should be) to make a property appear leased.

If it's not in your lease, it's worth adding in the future to ensure that Tenants keep the units clean.2. 

Adding to the above ensure to read the condo docs in detail to avoid rental restrictions.

Out of curiosity, as I am not considering arbitrage myself, but as the person renting the property and running the STR, how do you ensure the owner renews the property’s license each year? 

I would go direct to seller and buy off people that need to sell into the falling market to ensure you get a good price.

I found a few online, but wonder if I should build my own and have a lawyer vet it to ensure it's compliant with TX laws. 

If I took a random stab for a flip that price would be would be 65% of ARV- cost of a full gut renovation to minimize risk and ensure there is some level of profit, but I am just a random investor and don't have to deal with a nightmare 8 year vacant property and the rehab headache that might follow.

Ensure that there is no prepayment penalty on the note.