Tenant: "But, I don't have to pay $700."

I've seen these releases in Southern California to be 90 days (With no guarantee of that short of a time) of locked accounts where the owner had issues paying the mortgage, insurance, taxes and operating expenses for the properties.

I have the same question, but this issue is more complex when an investor has multiple investments in different states with federal passive losses carried forward from multiple states.I doubt that states intended to allow non-residents to not pay state income tax by offsetting state sourced income with non-state sourced passive losses.

However, this isn't to scare you away, because I was house hacking my expenses dropped substantially and I was able to pay that 20k back pretty quickly.

They pay rent, but there are lots of other problems. 

I pay him money but then he disappears for a week at a time and won’t return my calls.

My best advice would be to calculate how much you would need to spend on food and determine how that number relates to the amount of rent you are paying.

So our gross monthly income of $5000 - $3093 of EVERYTHING we need to pay each month = around $1900 in net monthly income. 

The loan insurance is in case we dont/cant pay back.

All told, the GP is making $337,500 just to arrange the deal (not including their reimbursement of any out of pocket costs they have already covered: due diligence costs, broker costs if they are paying anyone to bring them deals, legal setup costs, etc).