I can’t speak to PA laws, but it would be very difficult (as you are aware from personal experience) to ensure quality work on your property if they hire their own people.  

Here is some handy verbiage:If for reason of non-payment of rent Owner/Manager shall give a statutory 3 Day Notice to Pay Rent or Vacate, or if Owner shall lawfully issue any other noticepermitted pursuant to RCW 59.12 et seq. or RCW 59.18 et seq., Resident agrees to pay in addition to the delinquent rent and late payment chargesprovided for above, the sum of $100 for preparing and giving the notice, which shall be paid by the deadline for compliance with the Notice.

They become an "agent" for your deal, and if they misrepresent something or break securities laws, the entire partnership can be affected.

As far as I know owner occupied evictions mean that i dont have to show any cause to evict, and also same goes for seasonal tenancy - NJ's Anti Eviction Laws dont apply. 1 tenant didnt sign any lease, he is cousin of other tenant and just moved in as a lodger, month to month. 

My father-in-law and his two brothers want to sell the house and divide the shares equally. 

Might want to dust that law book off on "Single Action" as well as "Anti deficiency" rules in California.Talk to your significant other about risking every penny you have on an investment or, talk with your banker or bookie about getting cash to buy.

The landlord tenant laws are also very fair here. 

To answer you question of why protecting yourself from liability in another state vs your backyard may be more concerning is just that you would have to familiarize yourself with the laws of the other state and potentially pay significantly more to form protective entities(Texas LLC's are free once created for example whereas CA one's are $800 annually to maintain).

At this moment, NE Fl is being fueled by the new property tax laws effecting people in the North East.  

As far as raising money and paying a finders fee for bringing 'investors', you'd be better served by researching the SEC laws.