As a result, Rav may be in a very bad situation with exposure to cleanup and abatement that could end up being a 6-figure expense.  

Your liability exposure is greater driving your car than owning a house as a rental, especially an encumbered rental. 

But you can still get some liquidity and exposure.

@Jeff MillsYou may want to connect with the attorney who set up the LLC.LLC's are normally created to limit liability.The actions you are doing may risk you losing the ability to limit your liability exposure.

In actuality, if you  did not live in the flip and flipped it in 3-5 months instead, your ROI would be much higher so the fact that you have a few savings from the live in is all lost in opportunity costs anyways, and then some.If one was to argue that you do this live in flip for 2 years to utilize the homeowner tax exemption up to $500k for married couples, I would counter that argument with the fact that paying the added taxes on the first flip, but getting to reuse that same money 2 or 3 times in the first year and 3 or 4 times more in the second year, all those added flip profits would more than pay for that extra tax exposure.

We had a few people interested at the $1.9m mark but figured with the little exposure we got we weren't going to need to go below our asking off market.

When the exposure to the downside is greater than the upside.

He has some awesome recent posts that really speak to risk exposure in this market, and he really knows what he's talking about.

I have potential guests on both services ask for discounts.I believe that VRBO, now owned by Expedia, will be providing us with considerably more international exposure and since they are going back to having just one subscription rate the Search Rankings will be based on the quality of service we provide to our guests.They'll also be allowing us to rate the guests (like Airbnb does) which is beneficial for us as hosts.We receive the majority of our bookings through VRBO...probably 5 to 1 ratio.  

What is your exposure/risk for evicting somebody over $50?