The area you choose will dictate what kind of potential appreciation is in play for you down the road as well.  

Whatever your state dictates to be an agent is what you will need to do. 

You need to bring your rental up to market rate.That said, you don't allow tenants to dictate how long a lease should be and at what percentage increments the rent should be increased; unbeknownst to you, they negotiated a way for you to not keep up with the rental market. 

For example, in Arizona when the notice of trustee's sale is filed the borrower has 90 days to bring their loan current (or pay it off in full) to stop the foreclosure.In states with a judicial process, the timeline is dictated by the courts.

If it will be multiple properties I would set up an LLC with both of you as members and dictate the terms in the operating agreement.

I believe that each state has different laws dictating how to deal with unauthorized tenants residing in your property so if I were you I would do some research and/or contact a lawyer. 

The details will really dictate what the best approach is here. 

Your state will dictate this.

The price of the properties will dictate how many properties you will be able to obtain.

the leverage/risk/reward equation is one of the most important ones to get right in RE investing in my opinion, as it will dictate your long term success.