I know you'd never plan on intentionally paying him late, or defaulting on the loan, and you hope the house would never burn down and you'd find out too late that you had the wrong insurance, but it all happens. 

HVAC: Need to insulate and drywall the garage ceiling now potentially with more sheets of drywall at the ceiling since now someone is going to reside over a fuel-burning device: Car.

They absolutely will crash and burn within a few months. 

There is an option called a qualified contract (Q/C) where you can put the property up for sale (at 15 years) and if no one buys it (I'm way over-simplifying this) to operate it as LIH, you can get out of the LURA2) Year 30 - THe LURA burns off and once the leases in place expire, you can go market-rate.

If you hire the contractor, and the contractor burns down the house or electrocutes someone due to poor workmanship or negligence, what is your liability?

Addressing the problems is like trying to put out small individual fires in a forest that is burning.

I’ve been burned bad in real estate because I didn’t heed the roadblocks that were screaming at me (luckily it was over a 15 years ago and I’ve recovered), but, it’s still a venture that can cause great freedom or great pain.

Their only money making asset is their time.Speaking from experience, that means that every time I go to meet a buyer (or a dreamer), I not only pay for the gas and wear on my car, I'm also burning up time that I could have spent with a real buyer who is likely to transact.The bottom line is that dealing with dreamers - which includes nearly all "new" investors - is financially destructive for the Realtor. 

For example, the house burning down.

She's burned her ships.