Since we’ll be renting it we want to put it in an LLC but are concerned that may prevent us from taking advantage of this 2-out-of-5 year rule?

She makes her rent payments through PayPal, so there's no way to prevent her from sending these payments.

Screw down your art work, bold your beds to the wall and do all you can to prevent damage.  

I'm sorry this happened to you, and it's one of the reasons that I try to use an estoppel agreement to cover clients who are inheriting tenants when they buy a building; not that it would have prevented this but at least it would give both sides of the story before closing. 

That usually prevents any complaints.I think the best thing you could do is extra padding upstairs.

Appraisal can prevent the policy holder from hiring an attorney if the outcome isn’t in their favor.

Use this as a productive measure to try and figure out how it happened,  and what you can do to prevent it, or prepare for it in the future!   

Or the old standby, "we really can't afford to raise the monthly fees just because some of our costs are rising, let's just postpone that preventative maintenance project until next year".

You need to ensure YOUR house is taken care of, and already should have preventative maintenance in place for exterior issues.There certainly are differing opinions here, but I would never, ever, write a two year term for a new tenant...for all the reasons you are dealing with.

I feel guilty using my free time relaxing after studying and not building something for myself, more than anything I want to provide value and not excuses regardless of my limitations but I also need to remain realistic to prevent myself from ending up in a situation I can’t fix.