I know here there are several extra requirements for a property to be used as an assisted living facility.

Or they want to do something “extra” not covered by the insurance, or they want draws on their work?  

I would use the standard realtor lease form in your area and then look up common extra conditions landlords are using now.

She has been trying to BORROW the funds she needs $550K to pay off the Husband and another $300K of additional funds (Totaling $850K) so that she has the EXTRA borrowed funds to be able to make 2-3 years of payments on the financing (versus raiding her retirement account).

They have an ethical and licensing duty to be honest and truthful, and they cannot act against their Principal client, who you are not.  

You would want to avoid a DSCR refinance right now for cash-out as those loan programs will carry prepayment penalties - refinancing post-rehab to get your equity back out of the property (based on improved value) would leave you paying an extra prepay penalty. 

So I don't know if it makes much sense to buy a rental property for about 200k-250k, just to make a few extra thousand a year (based on a 5% return).

It is cheap in the big scheme of things and is an extra layer of protection.

I understand they have other clients and cant just drop everything to do what I'm asking but right now it feels like things are taking extra time by having a middle man. 

I’m looking to get some insight and truth to possibly investing in the area of Pittsfield, MA.