I'm not specifically familiar with any Houston requirements for a "Contractor's License" but there is not a State of Texas requirement for a "Contractor's License". 10 - 15 Years ago, the Legislature passed a requirement for all Builders to "Register" with a State Agency (I forget which one) but the requirement was dropped in the next legislative session.  

The proposed worth is 8.9 million with a 50k a month cash flow, but the asking price is 6.4 well below market value.

Have you run any numbers or put together a preliminary analysis to demonstrate the performance of the deal along with a proposed structure between yourself and the investor you are looking for and need?

No way am I approving something like you propose.

He proposed that instead we give him an equity stake and work on the property together.

I know what they originally proposed (and that was onerous) but I don't know what they actually passed. 

@Brett Martin Is it a quote or a bid proposal?

All I’m saying is own the mistake and offer to allow them out of the lease and propose a few other optIons as some have suggested (reduced rent, you provide wIndow units) .

The subject properties proposed rental income can be used towards qualifying income.

Sent a lengthy letter explaining all the reasons it's unfair etc...and that they can't afford it and proposed doing a $200 increase...and contacted my aunt to plea their case.