So the monthly rent payments received will not cover mortgage payments, insurance, property taxes, repairs, maintenance, etc, and to avoid default the owner will be required to “come out of pocket” for the negative difference. 

Probably,because they need to get their tax dollars. 

The wife did his tax return in 2018 Gross $120k.

The amount my tenant is paying me per month only cover 95% of my mortgage, HOA, and taxes. 

Also, you don't want to lose the tax free gain on sale. 

For primary residences, lenders typically don't require PITI (Principal, Interest, Taxes, and Insurance) reserves beyond the down payment and closing costs.

If not, it may be worth it to pay them a small fee to walk through the property with you and provide their guidance/expertise.

Need advice if this is worth looking into.The property has been negotiated at a 20%  discount and 7.6% tax adjusted cap rate. 70% LTV with Freddic Mac loan.

@Josh Haney I believe the legal/compliance piece is fairly well covered by those who already commented I completely agree that it's important to retain legal counsel to assist with drafting and also loop in an accountant to confirm structure is arranged with tax efficiency in mind. 

Highly pressured sales tactics at there 3 day events they do all over the US to get you wrapped into their high dollar coaching programs. Then when you don't have the money for them they coerce you into getting credit...