Normal appreciation occurs when your property is worth more because the market goes up. 

I started investing a few years ago almost by accident.

Tenant turn over naturally occurs every 2-3 years.

So even if you pick a state with stronger protections like WY or NV, the cause of action arose in the state where the tenant fell, so likely that the court where the accident happened would have jurisdiction.

There is no backup other than the opposite of up is down so down must be coming next.I acknowledge there's a strong headwind right now in the buyer's marketplace but I do not think a GFC-like crash is coming next as that crash occurred due to market fundamentals that are unlike the current situation in the US.I think we are likely to continue to experience market stagnation due to inventory issues going forward.

The kicker is that they share in the upside of any appreciation that has occured when you sell. 

Who enforces this internal agreement if litigation were to occur due to a party's breach of the operating agreement?

The Ohio broker described in division (A)(1) of this section shall retain the documentation that is provided by the out-of-state commercial broker as required under division (A)(7) of this section, and the records and documents related to a transaction, for a period of three years after the date the documentation is provided, or the transaction occurred, as appropriate.

Now, the other thing that does occur often is that maybe the lender STILL won't allow it...even if Fannie/Freddie do allow it. 

Permanent stains are never normal wear and tear.For most items the difference can be determined by asking the question; did this item wear out gradually due to use or was it damaged by accident, carelessness or abuse?