I'm surprised you don't know anyone that has been rather successful with a direct site, I hear of yet someone else every few months.

Any tips on sizing wiggle room for any unforeseen surprises on a property like this?

I think you'll be surprised at how different what he does is compared to traditional REI. 

You might be surprised at the number of times I had to explain to a seller their responsibility to reimburse a title insurer for a loss. 

Rents have decreased this past 6 months here so you may be surprised. 

If you're going to be stretching financially and don't have the reserves for surprises down the line - it's not worth the risk just to begin building equity.  

Surprisingly she understood the issues and agreed to move out.

Additionally, I would be surprised if any lender would approve this set up.

With flat-fee, then everything is WAAAY simpler as you don't have to calculate anything and the buyer knows exactly what you charge and will always know what you charge so no surprises and having to explain to them why one deal owes you more money than another.

I am constantly surprised that OOS investors pick markets that are more affordable than their local market and then decide to also go to the low end of that new market, driving up the risk even further.