Buying out of state could be a very simple, easy & low risk strategy.

You had no idea there was a risk of it falling on her car because you are not a tree expert nor clairvoyant and you never received her letter that she gave to the wrong person.

My first thoughts would be what if the rehab costs more to which I would think the risk there is limited by the 203k loan process, i.e., the lender won't lend if there is a gaping hole in the rehab plan/budget.

It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.Make sure your property manager is a licensed real estate brokerage.Understand you can not eliminate all risk, only mitigate it.

This allows you to own a property with very little market down turn risk other than vacancy and loss of paper value. 

What I have realized is that each approach comes with its own risks and rewards. 

It occurred to me to get the seller to carry a small 10% second.

My question is how to determine the proper amount of walls-in insurance to carry. 

With 4 people, risk is spread and there's enough meat on the bone if we buy deals right.

Okay, full transparency...I am biased...As a 30 year broker, licensed General Contractor, owner of a property management firm, and the owner of 16 investment properties, I think self-managing to save property management fees isn't worth the hassle, learning curve cost or the liability and risk.