So you now need more skin in the game with guarantees of the lease,rental increases,etc. as it affects a larger portion of the building now.No legal advice given. 

Back of the napkin math may work, but if I was the seller you do not have enough skin in the game to make it work.

You see, many a solider is talked into buying with a VA loan because entry into a mortgage is easy and you have no skin in the game.  

My mind is always thinking outside the box, coming up with more ways to skin a cat, expanding my mind like I never thought I could.

One option to control your insurance expenses are to insure for ACV (covers yours and lender's skin in the game). 

If he put some skin in the game, would that make it better, or would this still be a low return considering the risk?

Everyone wants someone else to pay for everything that happens to them as if there are no such things as accidents and there will always be someone there to pick them up when they trip and skin their knee.

They have already shown a recent history of not doing so (i.e. their mortgage).The double deposit is enticing because it increases skin in the game but I'd still rather have a highly qualified applicant at a lower price.

A bank can re-appraise your loan and decide if you don't have enough skin in the game, they will demand you put more money down.This, from what I know, has only happened twice-Savings and loan crisis (1990s?

They have more skin in the game then you do.Make sure you get clear title.