It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.Make sure your property manager is a licensed real estate brokerage.Understand you can not eliminate all risk, only mitigate it.

But you do run the risk of the HOA eating that up over time with increased fees.

So if you don' t read the condo documents you may purchase and find that you can't rent it out because there are too many rentals.Also, there is a risk of special assessments at underfunded condo complexes. 

Option 1 potentially more risk but if done with diligence can be very lucrative.

I don't think they'll come back anyways and hopefully the cops will catch them, but I also don't want to put any potential tenants at any risk whatsoever. 

Its a little more risky becasue its a higher % rate but as long as the project is profitable then you dont have much to risk.

Whether you're legally liable or not, I think you'd still run the risk of being sued and having to spend money to defend yourself.  

I have not yet seriously considered turnkey as I'd like to be a little more hands on (at the risk of taking on more trouble). 

My thought it is, it is a risk that can be mitigated with strong leases and insurance.Also, when you first start out, and form a new LLC there will be costs.

Alternative is to put my normal policy in effect and risk being canceled if they find he place empty.