In a short term, I'd eat the risk I'm not taking that for 1 year +. 

I am eating it out of pocket, and going to try to push it back on FEMA and any association that can work with me on it. 

@Ben ClingerHi Ben, I just noticed your post.Toledo just clarified their inspection criteria for section 8 houses and decided they wanted their cake and to eat it too...we don't have to have an interior inspection (since LMHA inspects that during their inspection), but we DO have to pay for a Lead Inspector contractor to visually inspect the exterior of the house and of course we DO have to pay the $45 fee (which is of course what this is all about).LMHA of course inspects the outside of houses along with the inside so the whole lead inspection is redundant.

They may just agree to cover them, especially if Landlord offers to eat the appliance costs if they cover the utilities.If that doesn't work and it is an issue for the tenants, I wouldn't do it.

While they do eat into rental margins the larger profit came from the sale and the added rental profit was not worth the hassle of being a landlord.

This is your seed, when you plant seed you expect a return, but if you eat the seed (blow your money), you have no seed to invest, (no return). 

If you are only doing a 1-2 year lease option, then I'd recommend you just buy down the prepayment penalty to 1-year and just eat it if the borrower executes early. 

I've even heard of GCs using auction type settings for returned items at Home Depot and Lowes for steep discounts.I've learned a lot about the GC game as I was up close to over 40 projects last two years and some went well and some did not and when they did not it was all Contractor related.If a GC isn't sourcing cheap materials at the same time milking the hell out of his 150-200 per day workers, then you can find yourself eating into your margins real fast. 

Skip the vacations, skip eating out with friends.  

As the owner, you may want to eat the cost since future tenants will likely make the same mistake.