They only look at their back of the napkin calculations of what they pay a PMC, assuming it's 100% profit, because they NEVER consider what expenses a PMC has.Since you like to crunch numbers, why don't you calculate how much it would cost for YOU to hire people to do the following:Inspect a property to make sure it's ready to marketTake marketing picsPublish and refresh for rent adsTake all the phone calls from adsSchedule showingsChase applications, process & screenGet deposits and sign leasesCollect rents, chase delinquencies & evictionsHandle maintenance requests, which are never handled fast enough for tenants, or cheap enough for ownersChase tenants for lease renewalsCoordinate MoveOuts, damage charges against security depositsGet RentReady bids to owner's satisfactionFollow up with maintenance to make sure done on time and done rightStart the cycle all over againProvide accounting services for all of the above, including owner reports and payments, annual 1099's, etc.Don't forget to factor in payroll taxes, employee benefits, company office space cost, company insurance, equipment, phones, etc.Once you do all that, you'll quickly find that PMC's are NOT making more than owners.FYI - this is why investors should always factor in 10% PMC Fees, 10% Vacancy and 10% Maintenance when running numbers on a potential rental purchase.

In fact I saw last downturn FLAT rents, waiver of security deposits, first months rent free with landlords fighting to maintain market share and service their notes.

And if it is normal wear and tear, you cannot hold back security deposit to cover them.

If one of you wants to take out a second mortgage on it to secure his/her interest, that's fine because it keeps the deal clean and there's nothing to dissolve if/when the break up occurs. 

If you do something simple Security First title can record the mortgage terms for the owner -- I did that on one of my deals -- we spelled out the terms (interest and how id make payments and when they were due etc -- they recorded it for us)Wasnt super official - but worked and owner was fine with it.

Glass block is my personal favorite for both looks and security. 

Some say the security backed line of credit will not go on my credit score and some say it will.

You have 24 hours to pay the security deposit in full and take the unit off the market.

Screen your tenants well, try to find a responsible one who will be willing to "manage" the property in exchange for reduced rent and take as much security as the law allows and you will be OK. 

So while the notion of not participating may provide a false sense of security on the liability front, it runs smack into a SEC reg violation.To address your specific question, let me say my thinking runs counter to conventional wisdom in regards to liability protection provided through the use of LLCs.