You have no history of received rent payments to show an "implied agreement" that will hold up in court. --- You have only eviction option if tenants don't pay.3) WIth no lease, your only eviction option is 30-Day, Demand for Possession.

Review their management agreement.

Operating Agreement is probable, but do they need tax returns? 

It also is helpful to have a California LLC in case you ever sell that property and move into another state so that you do not need to form a new LLC altogether with new operating agreement, just re-register in the new state as a new foreign LLC.

It also is helpful to have a California LLC in case you ever sell that property and move into another state so that you do not need to form a new LLC altogether with new operating agreement, just re-register in the new state as a new foreign LLC.

When you buy,how do you protect your investment, other than the formal agreement? 

Each tenant also signs a lease agreement for added security. 

One catch is you have to be on a rental agreement or lease to use the 75% income option. 

@Sam TrightThe agreement with the lender most likely will forbid you from selling any part of the loan, and if you did those funds would be to pay off the loan.As an example if you had a note worth $30k and lender gave you $15k, if you sold a partial for $20k the lender would require you to pay off the loan.Also most partial agreements also explicitly state the loan is not leveraged.

(this is called premium pricing)Keep in mind, if you refinance a house as owner occupied for the lower rates, you are signing a new 1 year occupancy agreement so you need to stay in that house 1 year post refi before you buy your next primary.