FHA and the USDA loan have permanent mortgage insurance which is an added cost that does nothing for you, whereas conventional removes the mortgage insurance once you have 20% equity in the property so if you can do conventional that is generally preferred but if you can make the numbers work FHA can be a good option too. 

What system is everyone using to keep track of property information such as insurance premiums, maintenance records, age of the A/C, etc.

I know I sound like an insurance agent, probably because I am one. 

I think I'd like to have all my money back so I can get into another property, while my tenants pay down principal... and I'm budgeting for capex, maint/repair, vacancy, insurance, taxes, and management... but is the benefit of having nothing in the deal worth having almost no true cash flow?

1- Secure contract with purchase price and terms2- Send contract to title (search and insure)3- Draft note and mortgage (you'll need a lawyer to do this- less than $500 likely)3- Seller uses proceeds (your down payment) to pay-off  the lien (The title company will handle all this)4- Close the transaction5- Establish payments to sellerYou'll want to make sure there will not be a delay between the payoff of the 1st lien- executing the "lien release" and closing your transaction- will require coordination.

Make sure you have good insurance in case she burns down the house.

And that was before taxes/insurance, etc.

My holding costs include $500 rent per month, insurance, and taxes.

Something to consider: Financing, contracts, title work, insurance, bookkeeping, taxes and returns can be overwhelming even when personally making a purchase let alone in an LLC when starting out.

I talked to my agent and he is telling me:1) If it is a sewer backup - NOT covered2) If the tenant left the toilet running and it overflowed onto the carpet, then it might be covered.Has anyone dealt with insurance on anything like this?