Like others have mentioned - having an objective scoring system that you apply to all applicants and the publish how you select applicants will help in preventing issues.  

Because my first deal tied up funds that prevented me from buying more investments in a quick manner I have decided that I must BRRR all future investments.

That have an exception in the title regarding the encroachment issue, but it shouldn’t prevent you from closing.The worst case is if the building were to be destroyed by fire or other means (usually the 50% rule is applied) the rebuilding would not be allowed unless in compliance with setbacks.  

And how would you prevent a downside scenario? 

I am not familiar with your specific city (or HOA if you have one), but the fact that a home is zoned for single family homes does not prevent you from being able to rent it out or rent out individual bedrooms.

What has prevented you from owning an investment property?

It's a classic new investor mistake to start thinking of a way to make more money on a single-family without considering the fact that there are local codes and ordinances designed to prevent that.

https://www.zerohedge.com/mark...Countless Fidelity Accounts Showing Zero Balance by  Tyler Durden Wed, 02/19/2020 - 11:01   While stocks are hitting fresh all time highs, bringing joy and spreading the "wealth effect" across America, clients of the Fidelity brokerage are having a rather shi**y day because due to a glitch, or perhaps a hack, countless accounts are currently showing a zero balance, or simply removing accounts altogether.While we assume this pesky "glitch" will be resolved promptly, we should point out that if the market were to ever again suffer a down day and should investors wish to sell some/all of their holdings, this would be a convenient way to quickly and efficiently prevent that from ever happening.

If you want to prevent people from using your internet connection for less than honorable things, this is not the best.But what do I know, I only consulted on the project.

such as weird little things like their doorknob fell off, or even things as ridiculous as their toilet is clogged and they want someone to come unclog it (I work for an apartment community and someone actually requested this)What can you do to prevent these (over time costly) small maintenance requests, when you don't have the money for a handy man to come out every time something comes up?