This would allow me to raise the rent for the main house a bit over market but I'm concerned usage could get out of control and making my cashflow take an unpredictable hit.Does anyone see other options here that may work better than the two above?

Quote from @Alan Roth: I'm already concerned.

.), existing site conditions (high ground water, site topography, existing soil types and soil environmental concerns, etc.), the location, depth, and capacity of utilities to service the site - including public utilities (sanitary, storm and water services), franchised utilities (power, gas, cable), capacity of the local streets to accommodate additional traffic from your development...Be sure to find out if there are any specific local ordinances you need to satisfy (possible tree & wetland surveys, together with any necessary tree & landscape or wetland mitigation plans) and whether there are any concerns from municipal departments (e.g. hydrant locations from the fire department, storm inlet and retention requirements, as well as asphalt / concrete road requirements from the engineer), entrance requirements from the road commission (left turn and passing lanes at the site entrance), etc.Once you get past all this you can finally prepare a preliminary site plan and enter the political arena to get preliminary site plan approval, and to address any concessions the board and neighbors want from you to overcome their objections to your development.

If you are concerned about your sales income stability moving forward, just make sure your reserves stay big enough to let you sleep at night.

I'm concerned with how to enforce any rules now that he's trying to skirt the lease.

As I am not a spring chicken with my age..there are always concerns about "What happens if I die?"...

As for foundation or other concerns about the condition of the property, there's no real way to know for sure since you don't have access to inspect the house before the auction (hence the risk).

Since the potential properties can be removed from the list in last min,  my major concern is when i fly in, the properties i'd liketo bid on could be already invalid from the list at auction. 

We have a note in property stating for guests to contact us within first 24 hours should there be any concerns.

With solid records and compliance, there’s little reason to be overly concerned about the size of the return.