RUN don't walk away from this tenant if you can..... He

Great friend & we have been warned about the dangers of living with a close friend but we want to try because we believe we can. He

Second but most importantly can he be held liable for misleading us in the first place.  

For instance does "the guy" have workers comp, GL insurance, a business license, trade license, professional liability, does he take before and after pictures, will he be around next month/year when there is a problem, whats his warranty on labor/materials, how fast can he respond, does he understand the issues involved in dealing with tenants regarding repairs, does he show up in a marked truck, uniformed, name badge or does he show up in a wife beater driving a beat up pickup and I could go on....The point is that there is ALWAYS someone cheaper out there but an experienced investor knows that cheaper is almost never better and in fact most of the time costs more money in the long run. 

Can he or she provide references? 

So by putting the loan through a TX bank, can he legally avoid CA laws?

If you don't have the historical data (previous contracts/jobs) or the technical know how... it can he hard for a person to know if a job should take 4 hrs or 10 hrs.

If a buyer does not need a real estate agent, can he/she directly negotiate with seller for the purchase agreement terms?

lol I grew my businesses while riding a motorcycle from the Taj Mahal to the Pushkar Camel Fair, eating Xiao Long Bao in Taipei 101, cooking food and donating to orphans in Chiang Mai Thailand, snorkeling on the beaches of Phuket Thailand and El Nido Philippines, releasing lanterns for Loy Krathong, climbing waterfalls, snowboarding in Japan, playing ukulele, and doing exactly what I wanted to do when I quit my job :) I'll be spending a month in the southern Thai islands for Feb, a motorcycle trip through Vietnam w/ @Arlen Chou in March to visit orphanages we support, then stopping in Manila for a good friend's party before coming back to the US to speak at Dave Van Horn's Mid-Atlantic Real Estate Summit.

Can he rent an apartment in Illinois and own a property in NY using this loan option?