If you can't treat this like a business and get rid of bad renters, then I recommend you hire someone to do it for you. 

I just personally do not think that is a good way to do business.

@Summer Dechanukul if someone can't say they have been deceived by a contractor or someone else in business then they haven't done much business.

I see many first time investors make the mistake of buying in a college town, but not where the students want to live.Business Sprints - You work like a lion in this business.

If your LLC is not doing business in MN, then it would seem to make sense to register it in CA to avoid the need to pay registration fees in 2 states, if you can avoid MN filing fees and requirements. 

My business partner and I are considering starting a real estate consulting practice where we would advise buyers, sellers and investors on the buying and selling process.

The rules are confusing me for whether this is only needed for hiring an individual independent contractor or if it's needed for hiring another business as well. 

And being a HML is a business venture!

The 400k$ quote is for a quite extensive whole house remodel (moving walls, windows, openings, expanding footprint and +1 bath, +1bed) and includes design, consultants and permits.

But that's no guarantee.And, you can follow all good screening procedures, professionally run your business, and don't get too cozy with your neighbor/tenant.After that, roll the dice.