If needed, consider mediation to solve the issue.

The main issue here is the insurance problem

Ask them when they issue distributions (anything before the 15th of the month is a red flag), do they require reserves, how is maintenance charged, do you see copies of outside contractor bills, do they upcharge materials (PM's have LAR accounts with Lowes and often get 20% off), do they keep all late fees or just the management fee, what other fees do they charge (renewals, inspections, etc), where are tenant security deposits held, how are evictions handled and are you consulted before filing, what screenings do they run, what qualifications do they require from tenants, ask for a couple other owners to visit with for a reference. 

@Justin CollierNever had issues like this

With the Midwest there are also winter issues and hail damage from thunderstorms that we don't deal with in California.

That said, you've heard you're not supposed to but you're not technically a creditor yet but could be.

What's the issue with taking losses on a Single Family Home? 

If so, that could cause issues on the back end - not a lot of lenders will let the wholesaler use their own title company due to hiding issues, etc.

Anode rods last 2 to 3 years not months so obviously you have other issues. https://www.amazon.com/Magnesium-Anode-Flexible-Water-Heater...

Hard to say without all the numbers, but I will say this not an unusual set up for the area....and also we have very few duplexes here in Jax, so if the numbers work I am not seeing an issue with the ADU.