How to help a friend out of an unwanted rental???

[AJ Romero]

I have a friend with a SFH built in 1900 that she and her husband bought 7 years ago for 107K and completely remodeled, landscaped, the works. Her husband recently got a new job 2 -1/2 hours away and due to the neighborhood and slower sales market here they were forced to rent it out. Needless to say their first year of experience as "unexpected landlords" has jaded them (renter wrecked the place and skipped out leaving them with 2 weeks of work and $5000 worth of repairs).

They owe 97K on the house, payments are $760/mo and were getting $1075/mo in rent. She knows I'm interested in SFH for rental and I've agreed to take a look at the house, but I'm pretty sure her house doesn't meet the parameters that I'm looking for. It's not in my target ZIP codes and they owe more than the house is worth and I'm looking to purchase homes with at least 20% equity. I want to give her some ideas, but not sure what to do...should she keep renting it out, perhaps do a rent-to-own deal (popular out here), or even a short sale? Pros/cons to each approach?

Thanks for your help!