If the loan term is not reasonable given the other terms of the loan and relative to the market, problems could arise.

We take care of any issues that arise at her house, her lawn and anything else that she can't handle.  

You're right in your assessment, I'm just pointing out potential problems that can arise from not establishing/following your screening criteria.

BP,This question arises from a goal I've set for myself to become a millionaire within 8 years (my 30th birthday) and have a monthly rental income of $10K+ (this is the minimum) a month.So, knowing what you know now, if you could get those 8 years back, would this be possible for you?

Are the rents simply to high even in a rising market?

Do the activities in this particular case arise to the level of quantum meruit; ALA the painting?

In the end, after a renovation, I can sell a property I've held for a while so I can spin more properties if the opportunity arises. 

The contractor fee is arising from the loan requirement, it's a cost of obtaining the loan, just like an appraisal,  it must be disclosed, as well as the relationship of H&W as that too is covered in RESPA. 

I'm afraid you have seen only the tip of the iceberg regarding damages, especially since the place is full of their stuff.Not addressing issues as they arise, not serving appropriate notices for lease violations in a timely manner, not charging for damages as you discover them..... you are in a world of hurt.... and I feel for you.

I'm interested in ways to grow that income while it sits but also have it available when the need arises.