I am just hesitant for the obvious reasons - safety, hassle, etc.

I've got a "special deal" since i'm an experience RE agent and not only know the basics already but can negotiate..lol...Some people have no clue on how to write the contract or what the EMD is and they need to go through the essential education...I don't buy anything what comes my way unless it makes sense, but I do believe in constant education and mentoring.

They have renters insurance, but I still increased the deposit for my own safety. 

I'm glad to hear your experience with house hacking, as I've had that exact discussion with my girlfriend (I plan on proposing sometime soon), and she's sold on the idea of house hacking and essentially living for free.

Essentially taking an 8% dividend on their stocks?

While I agree an umbrella will provide essentially the same asset protection as an LLC you will only need to pay for the LLC once.    

I would check with local city codes and make sure what licensing is required, you are essentially operating a hotel model.

-Since tenant’s non-payment of the late fees are essentially a breach of contract, is it possible for me to refuse to renew the lease due to this, specifically since the tenant refuses to pay the late fees?

I have been actively acquiring Notes for passive cash flow since that time.I like the the passive nature, the safety and the cash flow that I receive from Performing Mortgage Notes.

That said, when it comes to investing, you have essentially two levers you can play with -- TIME and RETURNS.For a passive investor who doesn't want to actively search for, negotiate and manage investment deal flow, you're going to find that your returns are somewhat fixed at between 5-15% (these days, likely closer to 8-12% unleveraged or 10-15% leveraged).