However, I know that the lease we now have covers updated requirements like carbon monoxide detectors, which is what I meant with being in line with the PA laws. 

I was then able to form the LP with myself as general partner and him as a limited partner, and took out an umbrella policy to cover my liability. 

@Brian Eastman covered the liability side pretty well but don't forget the huge benefit that I'm a fan of by using a ROTH, all of your rental income is tax free. 

But like all insurance, its to protect against possible losses you could not afford to cover yourself. 

You can request a security deposit to cover you for such eventualities, in some states there is no maximum, in some states you have to inform the tenant/s where/how the deposit is being held.

I really want to do the right thing as I am purchasing this home for investment purpose and will like to put this in an LLC to separate it from my personal assets and be cover from a liability stand point, but can't really afford the 20 – 25% down payment.

I'm working through this process myself and will be setting up an LLC where I'm the manager and there are agreements in place to cover the other investors. 

Please contact @Denise Evans or better yet, get her 2018 tax lien guide she sells and mostly all of your answers will be covered. 

I suspect there are still some heavy discounts in subprime areas or small balance very rural type markets.. but your not going to get big discounts in markets that are quite firm like west coast etc.. ( unless very rural)...

Purchase price was $75k, putting down 20% ($15k) and hard money was going to cover rehab costs of $60k.