We want to maintain a cordial & friendly relationship with our tenants, but if they are uncooperative, we will assert our legal rights.

Typically the cost of starting and maintaining an LLC are minimal, however this varies state-to-state.

It's up to you.Regardless of how you want it handled, you'll typically maintain a reserve fund for the PM company to draw from for authorized repairs.

- How difficult it and costly it is to operate/maintain LLCs?

I never visited that area but know and visited near that area, i know that the area is a moderate to high crime area. and i also know that for that area they do maintain consistent blue collar/factory type jobs. so as a rental area i think from what i have learned thus far, is that this is a good rental area barring the crime. where i choked was the distance, and started thinking how will i maintain it from a distance.my questions i guess would be. those who have experienced similar situations what did you do?

From the owner's perspective, it is or can be a nightmare if the home is not properly maintained.  

It obviously has been well maintained.

Option one mitigates risk w/ a partner, while they also have an invested interest to build at a good price while maintaining quality.

This will allow you to maintain a cash reserve and give you time to do the project.

Not every investor has to pay the $200, just the ones who don't want to maintain their property.