A lot can change over time just make sure that agreement is clear it is there to protect both of you!

Is there any reason for RE investor to set up an LLC in CA considering the cost and stronger protection in TX?  

What you want to protect is your exposure to liability from a lawsuit by the tenant or someone else.

For instance an investor with little cash but a lot of energy may be able to buy a high yielding property that requires a bit of maintenance.Conversely an investor with a lot of cash may be able to suffer much lower return in exchange for being able to buy a worry-free building in a more rapidly appreciating area.

Conversely an investor with a lot of cash may be able to suffer much lower return in exchange for being able to buy a worry-free building in a more rapidly appreciating area.I appreciate your recommendations and help.Best wishes,Erik

Animal ownership is not a protected class, so other than service animals there's no legal definition of discrimination.

Any suggestions  from the gurus - Re: protection from worst case scenarios?

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it.We have a 12 page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord.

The only way I could completely protect myself against unlawful discrimination would be to apply to houses and say there’s no pets then request accommodation before signing the lease.

Tenant has already indicated it is going to be a fight to get funds as they move out so best to file to protect yourself.