But like all insurance, its to protect against possible losses you could not afford to cover yourself. 

You can request a security deposit to cover you for such eventualities, in some states there is no maximum, in some states you have to inform the tenant/s where/how the deposit is being held.

Also, seems like there may be something going on that the homeowner is having appointments without the presence of their representation.

I really want to do the right thing as I am purchasing this home for investment purpose and will like to put this in an LLC to separate it from my personal assets and be cover from a liability stand point, but can't really afford the 20 – 25% down payment.

I'm working through this process myself and will be setting up an LLC where I'm the manager and there are agreements in place to cover the other investors. 

Please contact @Denise Evans or better yet, get her 2018 tax lien guide she sells and mostly all of your answers will be covered. 

Purchase price was $75k, putting down 20% ($15k) and hard money was going to cover rehab costs of $60k. 

@Ashley Russell you need to read your HOA covenants - those cover most of what you are asking.

We rented the home during the winter to snow birds to help cover the expenses.

Keep in mind that while that looks like 10% down, HMLs will require additional reserves to cover a certain number of interest payments and to front the rehab.