How can you protect yourself and make sure they won't try to move your tenant to another landlord who will pay them a full commission?

California has some of the strongest consumer protection laws around, so if it exists here I must assume it exists in New Jersey. 

I’m reading everything I can to make sure I thoroughly protect myself.

Reg A allows the issuer to advertise, meaning that they could recruit investors from the general public via marketing, and the regulators want to protect unsuspecting investors from unscrupulous operators--so a limit on how much those investors can invest might protect some folks.But the Reg D 506(b) exemption prohibits advertising--meaning that it is generally thought that investors aren't cold leads from a billboard, instead they are people who might have a pre-existing relationship with the sponsor, or is friends with other investors and so on. 

We were also gonna put the house under our business LLC so that we can get tax write-offs and we would be more protected if something went wrong.

Sure you could possibly get away without it but this is more about protecting your assets. 

Trust is in the writing of the legal document that gets drafted for the protection of both parties. 

The insurance I am talking about is insurance to protect your property such as from fire, damage, etc. 

His agent said he was told he could fight it but I think in the end he has just given up so that's why he fled to another state.I doubt he will try to sell to anyone else, he's a bit mentally unstable but at the same time, I would like to protect my interest in the property if possible, or at a minimum be able to recover my earnest money.

We usually did year-Leases, but since the home has things like older cabinetry and older master bath they keep complaining about and other comments they make, we thought month-month was a good way to protect us if things blow up.