However, before the lawsuit, I'm diligently checking their asset value, because 100% of their properties are residential, I see their asset valuation is actually above their liability.

Your primary insurance policy with $300,000 in liability coverage should be sufficient in 99.999% of all lawsuits.5.

I think the pm company has full liability.

Lenders require limited paperwork and there is limited personal liability on the loan.

However, if this total income number is negative it will count against you like any other liability would (think car loan or other mortgages with no rental income or credit card min monthly payments/etc) against your DTI.DTI is typically maxed out around 45-50%, so half of your monthly figure so if you make 10,000 gross per month your max liability at @50% DTI is 5000 a month max payment.

The reletting charge doesn’t release Tenant from continued liability for future or past-due rent; charges for cleaning, repairing, repainting, or dealing with unreturned keys; or other sums due.

I'm so much happier now, earning more income and tax benefits, don't need to be involved in the properties, and have reduced my liability with an added layer that puts more distance between me and the tenants.

You are being honest and said nothing to open yourself to liability.

One downside I see to this strategy from a tax perspective: You are unable to take advantage of the STR loophole which is a massive offset of your tax liability for many folks.

Now DSCR loans are loans that are looking primarily at the asset to pay for the liability of the mortgage.