If they start a fire or break a pipe then you would likely have coverage (review your policy for specifics) but if they are simply negligent or messy then you will have to pay out of pocket.

As to the hard money lender thinking the deal was "bad" - it never got to those kind of specifics - they have an FAQ on their website - "no scores under 640".

I have a business idea attached on the back end of it for value add to the tenants since it is a very specific niche market that I am targeting. 

The real estate license that I'm looking to obtain will be specifically for flipping houses.

Likely not.A self directed IRA is an equally viable means to diversify existing retirement savings into real estate, and you do not need to change plan formats if 2-3 years down the road you get tired of dealing with eBay and are no longer self-employed.The IRS is not specifically targeting self-directed retirement plans.  

So I have been doing quite a bit of researching on market cycles, more specifically emerging markets.

Suppose one purchased a 4 plex for $400k and took the standard depreciation for 27.5 years deducting $300k for tax purposes.

Most of this piece probably won't focus too much on specific deals, but rather, on my experience throughout this (ad)venture, starting out as a reckless and aimless 22 year old. 

It really helps me to be as specific as possible when setting a goal.

(I'll list some books below that are great to start with) Joining your local REIA is a GREAT way to get into the world of investing for your specific area.