FHA/VA loans are backed by the government up to a certain percentage, so in the event of default the lenders are guaranteed to receive a portion of the principal back. 

While it's nice to have your own securities lawyer and necessary if doing business online investors may come forward from many different States on an SEC 504 reg D filing with just a handle of local investors we suddenly had blue sky laws from 4 different states as peoples subscribed with their out state LLC's quickly subscribed its hard to turn down those investors as accredited investors, I Found many investors held their money out of state in LLCs even if they were a neighbor the source of funds was a 401k or LLC in another State. you would have to spend more money writing investor subscription terms for each States special Blue sky laws. it's usually the cheapest to file with Federal SEC to cover all investors.

The government doesn't just come in one day out of the blue & take away your home because of your tenant's activities.

What the Condo Association does for losses in common areas where the damages are less than their applicable deductible is determined by the governing documents.  

Primary residence loans that are not the usual product backed by the government are called "non qualified mortgages" aka non-qm.non-qm providers can be more creative like using bank statements instead of pay stubs, but I can't think of anyone that does not do income verification.

They are federally protected during bankruptcy.

@Andrew Postell i plan on owner occupying it and I cant quality for any government loan so I have to go the non-QM loan way

Depending also on exactly what the issue is, you guys may be able to slug it out in a federal district court in Washington if there is subject matter jurisdiction. 

Please choose one:1. you're crazy2. you like having your property destroyed.3. you're burnt out and don't care anymore.4. you like dealing with bureaucracies.5. you want to help the government spend your tax dollars.6. you have a friend that likes to do repairs7. you want a renter that you can't remove.

In California, residential rental property owners pay a flat 6% state tax rate on their total taxable income for the year (in addition to any federal taxes owed).