In late 2018 this property owner's management agreement with us ended and he began working with a competitor.I got a letter from the Division of Real Estate yesterday.

Simply have a JV agreement for every deal you do with an equity split that makes sense and use it for each purchase.

I answered my own question by going over the lease agreement, It says we pay for water/sewage, with that being said, I am going to assume we cant charge water until its time to renew the lease.

When taking over a lease from a tenant(s) on an investment purchase, what does that procedure look like?  Is a new lease drafted or an addendum to the current lease etc.?  Thanks in advance

Verbal agreements are normally binding, if harder to prove. 

Expect delays and allow for time to work through issues such as title work, rental agreements, and refinances.

As I'm sure you know, it's important you view your tenants as business transactions- make expectations clear, and outline everything in your agreement they will be responsible for and penalties if they do not hold their end up.I agree if you ask for too much, they may pass- but it's unlikely (as long as your asks are reasonable), considering the eagerness and need from renters- and they are used to providing most of this with other managers and landlords.

You would want to iron out a business agreement with your investors before involving an attorney. 

Hi members, could you please clarify if a PM company is used then is the rental agreement between tenant and owner or is it between tenant and PM?

You can get detailed agreements and try to enforce via a security deposit.