These folks you need to talk to - let them know when the rent is due and when it is late and review the terms of their lease.When leases expire you may want to use your own lease with clauses that will protect you.You should talk to your inherited tenants and do an inspection of their unit.

Take time to clean dirt, remove nails, spackle and sand, it doesn't take much time to do it right.Hopefully you haven't already done new flooring, if so be sure and protect it.

The down payment protects you when there is a market downturn. 

If you don't like the rules a tenants  best option is to leave.If she wants protection from lawsuits all she needs is adequate insurance, A LLC or trust does not provide any greater protection and is a unnecessary expense.

Do you have a complex tax situation or are you looking at a liability protection strategy?

If so, how will you be able to effectively manage and protect the property?  

You need to study your state landlord tenant regulations before you enter into this business to protect yourself and your tenants.

To give them 100% protection file a mortgage and note 1st lien position.

Both people are not a protected minority or a family status.  

A landlord is required to make reasonable accommodations to a protected class of applicants, but a landlord is not required to pay for those.