Having said that, prices and rents are higher in the Bay Area in CA than many in the lower-priced states, so it might justify the investment a bit more..

I also buy long term rentals out of state and just put an offer on one in Arkansas.

Getting a contractor who is not hell bent on ripping off an out of state investor 

My spouse and I just went through all of that a couple months ago and ended up ditching Armed Forces Insurance to go with State Farm. 

Most seem to like there to be a business reason for the state you use to create the LLC, either the property is there or you live there. 

They mentioned that the family member began debt consolidation 20 months ago, the way debt consolidation works the company lets it go into collections I am concerned that if the person files for bankruptcy.Even just one of 3 family member file a bankruptcy 7, can they stay 3 to 5 months without paying rent?

Rinse and repeat as many times as life allows, or convert to buying pure investments.Consider employment with a property management company.

States Can Still Require Additional FilingsEven though 506(b) offerings are exempt from state registration, individual states can still require notice filings and fees.

However, bc of the losses, mortgage companies don't want to touch me when I am fully able to pay the mortgage.

Also, I am an out of state investor and the properties are 450 sq ft which they don't like either.