We had a similar situation occur where the guy was arrested and deported through ICE.

I'll keep you posted if anything significant occurs that changes my thinking. 

I'm not sure if you are a beginner or not but my thought process was always that if this evolved into a sustainable business venture for myself, it would only solve or prevent problems from occurring the sooner I created a 'bulletproof' lease.Start gathering clauses from other landlord's leases and compile them into a well thought out list and take them to a local realtor that also actively invests in real estate.

Buy things that would still be financially healthy if a market correction occurs sooner rather than later.  

Do you have any regrets or unexpect things that occurred that I should be aware of? 

The rules that apply to a franchise can have specific clauses that dictate how transference of ownership can occur.  

If I do not, what is my liability exposure if something were to occur?

2) When the Cash-out-refi occurs and I pay my lender back with interest, is there anything I need to be aware of to prevent unforeseen tax implications? 

The sale occurred on 7/28/16.  

If that were to occur, he would have to sell the house under construction/renovation as that would be the point for which he would walk.