There are at least 8 other investors owed money and 6 went together on a lawsuit trying to get their money back.

Will this kind of structure protect my asset my liabilities, law suits.3.

You won't be able to get a conventional loan crossed over different condos and you don't want to do this because you can't sell them without getting partial releases.Is the complex 51% owners and no lawsuits? 

Scenario 1 looks promising if you can pull it off - but sounds like a sticky and complicated situation with a lot of moving pieces and potential for things to go wrong (lawsuits, disputes). 

Houses that are already finished might advertise an in-law suite. 

For anyone who has rented by the room, how do you make sure you don't get caught on the wrong end of a fair housing lawsuit?

I also look for lawsuits and see what happened in them.

It's not one single family but rather 2 single families each with an accessory dwelling unit (ADU) or mother in law suite.

If the risk is making the payments, then again that's where the tenant's money comes in.Now, if you have negative CF and a loan, then you are committing financial suicide.The discussion here is the math issue, and the math says, "use the debt".What is a worse/better situation/risk to be in:1 - Pay all cash for a property, an have to wait 10 plus years before you recover your cost and start to make a profit, and have 100% of your property exposed and at risk of losing it to a lawsuit, or...2 - Pay only 20% for that same property, take less than 2 years to recover your cost and start making a profit,  have 80% of it under a lien which protects the property from a lawsuit since only 20% of the property is exposed....and it most certainly does matter where the money comes from to pay for the property. 

Also runs background check on this person for pending lawsuits, I don’t care how well you know them.5.