I talked to my friend that got out of court. Turns out that the room addition he was living in is not permitted. So I need to verify the permits. The other bit of advice from my realtor is to put all utilities in my name.
The other thing is not to rent to legal students should I go that route.
One poster said its not preferable to live close to tenants. I dont think its all bad in that I could keep an eye on them and would not have to travel for maintanence.