Since your in-laws own the condo, it seems like the easiest solution would be for what you first suggested in receiving compensation via form 1099.

This point of view would require additional research and due diligence to determine what is best you.

Additionally, in general, it would probably be good to find out how long the typical eviction takes in your area.

I am also a disabled veteran at 70%, so I don't get 100% off of property taxes, but I do get a discount, in addition to the benefits of homestead exemption. 

If you open this as a single-member LLC, it gets a little tricky with additional state taxes when sold or if something were to happen to the single member and the property went to a family member.

In addition, being on a hillside in SoCal, it is critical to determine the makeup of the hillside sub-surface conditions as this will make the difference between a 150k foundation and a 500k foundation.

When you buy an investment, you should have additional funds set aside to handle the renovations, bad tenants, long vacancies, and other problems that will pop up.

Any investors in the Houston area with experience in building an addition for a home to increase square footage and add value?

Additionally they might want owner finance with some down for the business, building, or BOTH. 

Additionally, alternatives like real estate crowdfunding or investing in RE mutual funds offer diverse options.