The biggest advantage of using someone local to where you're buying is that they will understand taxes, insurance, and similar items very well when it comes to DTI/DSCR calculations and payment quotes, and they will likely have a local network of service providers for ancillary services (survey, inspections, etc).

Include an exit strategy, tax planning, and insurance to protect both parties.

If it is for liability protection, keep in mind to actually limit your liability means that any loans and insurance for the property need to properly be in the name of the LLC and not your personally.

I have already shopped insurance, and the sellers are providing $5k towards prepaids/closing costs. 

You need to think about not just the potential income but also the potential problems such as city ordinances, state law, insurance, potential eviction issues, etc.

@Jinglei ShenThe insurance of $1,400 a year seems pretty high in my opinion.

My figures are below.TaxDeed Winning Bid: $489.00 (My Bid May 2013)Property Clean-up: $450.00 (mowing, trash removal)Taxes & Insurance: $80.00 (2013 & 2014)Sale Advertising: $130.00 (Signage, Newspaper Ads, etc)Filings & Legal Fees: $245.00 (Deed, Lien Releases, Sales Agreement Docs)Total Costs: $1395 (approx)Sold for: $3250.00 (August 2014)That is better than the 25% I would have received if the property was redeemed during the redemption period.

Does renters insurance cover something like this?  

And be sure your insurance costs won't be insane.Finally, if you're near Asheville at times we have two BP meetups per month here.

I got it into contract and then had a huge plumbing failure during the home inspection.