I might reach out to you with some specific questions on that.

As is the case for many of us in California, investing here is cost prohibitive so I’m looking to invest in the Midwest and Southern US Specifically in major metro areas in Alabama.

Also, you may be able to take deductions since it's partially a rental (talk to a CPA for specifics, but I think I was able to deduct like 50% of the utilities, HOA dues, depreciation, etc (see here for more info since I could be totally wrong: https://www.nolo.com/legal-encyclopedia/tax-issues...)

Do I branch out to other neighborhoods or wait for this specific property to (maybe) come available?  

Of course, the main issue we seek to tackle is how to best limit the liability of the parent company - and the attorneys that we have spoken to claim that 1) "this is out of their league" or 2) are unable to provide any specific insight on the specifics of the legal structure.

I think it is going to depend on your specific area, the midwest is fairly large and prices will vary by location. 

Your locality will state which rules specifically you have to follow, but if someone applies but does not fit your criteria (So long as your criteria doesn't discriminate against protected groups), then you do not have to rent to them.

The city has some real specific rules about operating them and they’re not really investor friendly.

I doubt your llc will qualify for the 20% deduction...there a lot of requirements and other professionals such as lawyers, doctors and accountants specifically do not qualify for it, regardless of entity structure.BTW, since your llc wouldn’t be a licensed brokerage, yes you’d be violating licensing laws and I suspect are putting your license at risk, if that matters to you.

The deposits should remain since they are part of the property lease and not assigned to anyone specific.