Liability is not really an issue if you properly vet your tenants and then treat them well, and any way a $1m umbrella policy is very inexpensive when added to your homeowners policy.Our first property was an up/down duplex, which we lived in for 6 years as the tenant paid the mortgage and the property appreciated.  

A partnership should be treated like a marriage, and a single-member LLC should function as a component of your estate plan.

I live in Fort Worth, TX, and I have recently decided to purchase my first home, but I want to treat it like an investment.

It will probably take a few transactions before you earn that trust status with the broker.Do not use a residential broker, they will treat it as a residential purchase and most likely either miss something crucial or screw up the deal some other way.Erik

There is a decent chance they will treat you better as an future resident (who'd rent out the MIL + other unit) versus an absentee landlord.

It may also require some boring into concrete and treating the interior walls by plumbing fixtures.You should seal up the exterior to prevent rodents if that has not already been done. 

We run a 98% occupancy at any time, guarantee all tenants we place by paying for their evictions (we evict less than 1% of our tenants annually), but most importantly, we understand that our clients' properties are highly valuable investments, and treat them as such.

I get the feeling you are treating this more like a startup and less like RE investing which your background (and mine) makes us prone to do. 

I didn't like thinking like this but I do own a rental property and there was no way they were just going to stay there with no documentation, it is as much for their protection as it was for mine and the property.If you do this you should call your insurance company to verify that you are covered if there are any problems.Before we got to the point of signing the lease it fell through so I never went through the process completely, but I treated it as a landlord tenant situation.From what I read it happens a lot with no issues..but that  1% chance something should go wrong....

[Note: Once/If your real estate company grows to a size where you have 5, or more, full time employees, you will be considered an operational company and will be treated as a CCPC.]