My first concern would be, are you sure it's a "deal?"

The Tenant has been paying the rent on time, but as I stated before, the risk of losing the property to Asset Forfeiture seems to great for us to bear.

In NJ, it just has to be an interest bearing account. 

Mark it up to whatever the market will bear--will you hit $5,000 (and what about income tax--who knows--there are no guarantees in life).

Remember, there's no universally right or wrong answer here, just the one that fits your situation best.Keep up the hard work, your clear thinking and determination will undoubtedly bear fruit!

I have witnessed people trying to approach/feed/pet bears with cubs, elk, etc. 

Same goes for number of LLCs and what to fund them with, since bear in mind that CA tends to be more cumbersome and expensive to have LLCs than other states.California is generally more cumbersome than other states when it comes to taxes and filings.

For example, in Connecticut, we are required to hold the money in an interest bearing escrow account in the name of the tenant.

Finally the contractor gave up on me unable to bear the drama.Tenant is a drama queen.Now the tenant withholds part of the rent and she says she will get it fixed since i am not getting things done on time.Is this even legal to do so.

Maine will fit well, and it's the only state my family feels comfortable about me going to (they're concerned about gun violence but that's really blown out of proportion I think - I'm more scared of wolves, bears, and cougars!).