AND materially participating in your rental activities (spending 500 hours or more on your rentals OR 100 hours and more then anyone else OR doing all the work) 

The easiest way to narrow down the best path for you is to decide how passive vs active you want to be. 

I have noticed the outdated homes in Las Vegas sit longer and they give good opportunity for a house hack if you do not mind the updates.

Just apologize profusely and assure them you will never call them again, remind them they have your number should they change their mind. ;)

Some people love them and actively seek them out while others don't care and would spend money to convert it back to normal. 

Remember, a good agreement makes a good deal better, but a bad agreement makes a good deal bad.Also, as @Dan Heuschele alluded to, if either of you performs any activities whatsoever while residents of California, the state of California's position is that you will have to register your LLC with the California Secretary of State (even if formed in Texas or some other jurisdiction), file the annual Form 568, and pay the annual $800 tax.Also, by forming an LLC in Texas, you may be subject to the Texas Franchise Tax.So really the only person who can answer the question of whether you need an LLC or some other entity/arrangement is a qualified attorney who thoroughly understands each partner's situation with respect to themselves and each other.If you need a reference to a good one, I have one. 

there are lots of lenders active in them.also - do you have solid comps for your ARV?  

From my understanding, if its passive income, just a room-by-room rental, it would go on your schedule E just like any other rental. if its active, like a short term rental situation or mid-term, something like an airbnb or bed and breakfast where you're actively including extras, it would be filed on a schedule C. disclaimer, im not a tax person, so double check this with your tax pro. when you go to qualify for your next purchase, whether that's for primary or inv., using a full-doc loan... if its schedule C, you would need to do a 2 year average of this income in order to use it. its looked at as a business, and self employment income. if its schedule E, theoretically you could use the schedule E income calculations just like any other rental even after the first filing.

Odor abatement companies charge that much because they will have a machine and an enclosed system in place to suck the odor and source dry so it will not come back, my opinion is you are stuck with that or finding someone who doesn't mind the odor.

there's nothing unethical about helping people save their credit when facing foreclosure, keeping in mind that their credit will be totally destroyed by this, so at least they can save their credit by investors helping them.