The emphasis was on classic buy - fix - rent.  

Sorry if I didn't gather from your initial comment, but does this scenario still avoid the primary issue of being named as a part owner, losing us the step up in basis later on down the line? 

If they have no reviews, nothing to show for, they clearly have nothing to lose.

If she violates your notice and refuses to leave, I believe she will lose her voucher and her ability to afford another rental.

One objection that is common now a days is the first mortgage rate being low and the home owner not wanting to lose that low first mortgage rate.The other objection is they want to use the Heloc like a credit card only making a payment on the portion that they use rather than the full amount.

Giving up a guaranteed increase in value with them using their own capital to increase the square footage would seem like a no brainer, but how much are you losing if you remove the drive thru and can't put it back.I would talk to commercial brokers and other owners in your area to see the value of a drive thru.

(I know BP is focused on making money through REI where this scenario is really about using RE laws to minimize losing money.)

In contrast, property tax liens are non-negotiable and must be paid in full to avoid losing the property.

The Arbitrage unit that we operate is owned by a friend, so we probably played a little fast and lose with our agreement with her. 

Will I lose depreciation deductions if I use Roth IRA fund?