My preference for providing value to others is by use of my brains and not my brawn...or lack there of. 

I think it really comes down to what you are comfortable with but I don't think background check, credit card check, etc on top of a signed lease (and even small security deposit) is unreasonable for an MTR. 

You want to be sure they have dealt with investors’ money before and been able to provide them with returns.

I provide/manage the funding, books, oversee the budget and manage cash flow.We do divide the the responsibility of finding deals and of course, we both have to agree on the numbers before we make a move.  

Now, courts will provide a check on federal regulators.

Our monthly operating expenses, including salaries for property manager, security,housekeeping, utilities, insurance/taxes range between $3500 - $4000 a month.

Hopefully, he provided guidance on how he wanted things handled.

As long as it meets all the standard kinds of coverage, the lender shouldn't care either way.STR insurance usually FAR exceeds any kind of coverage that homeowners provides.Proper, CBIZ and Foremost are STR insurance providers.

Add in that money goes out many months before any generated income, the worse financing options versus purchase financing, the detraction of something (even if it is just yard space) from the primary unit, the work involved even hands off is at least as high as a BRRRR but a brrrr can provide an infinite return. 

Based on the information that you have provided.