Ok, I'll start out by saying my answer is based on the statutes in Alaska, so they may not apply to you... and it's been a while since I've read them, so I may not get things quite right.1st... if you sign a lease based on a 30 day billing cycle, and they pay multiple months up front, the 2nd and 3rd months rent would be considered 'prepaid rent', which you might be supposed to give back to them if things break down.  

I'd turn lemons into lemonade.Your landlord may quickly be one a seller if you follow these simple steps:Report property with no water service to code enforcementCE red tags house for lack of water service and habitabilityYou hire attorney to rep you against ownerForce issue with owner to become seller or prepaid long term rent credit and option to purchaseHit landlord up for cost of replacement rental during time of inhabitability..

I received a general loan quote from them today with the following breakdown:Purchase Price: $100,000Lender Fees: $1,290Appraisal: $450 (told it ranges from $350-$450)Prepaid Interest (15 days): $1601-Year Insurance: $600Insurance Escrow Reserves (2 months): $100Tax Escrow Reserves (6 months): $900Title Fees: $940Lender's Title Insurance: $500Transfer Tax: $455Recording Fee: $179Interest Rate: 4.875%APR: 4.763% (not sure how this could be lower than the interest rate, interesting)Does this seem reasonable?

There are also rent to own stores, secured credit cards, prepaid cell phones and a whole host of services available to those who are terrible with money and credit.

Any payments on the balance remaining from the original loan must be included in the debt-to-income ratio calculation for the refinance transaction.Note: Funds received as gifts and used to purchase the property may not be reimbursed with proceeds of the new mortgage loan.The new loan amount can be no more than the actual documented amount of the borrower's initial investment in purchasing the property plus the financing of closing costs, prepaid fees, and points on the new mortgage loan (subject to the maximum LTV, CLTV, and HCLTV ratios for the cash-out transaction based on the current appraised value)."

A car loan, prepaid credit card, gas credit card - and PAY IT OFF EVERY MONTH.

IRC section 461(g) applies to points or prepaid interest.  

The lender will have to raise your rate high enough to not only pay all your closing costs, perhaps your prepaid interest, tax, insurance, but also to generate enough LC (lender credit) to pay for the UFMIP difference as well (refunded UFMIP - new UFMIP) in order to make your FHA streamline refinance a "complete no cost."

If the tenant doesn't have a bank account you can suggest alternative banking, credit unions, or prepaid debit cards if you're doing online payments.

Then you just send a written reminder a few days before each “extension” kicks in out of their prepaid reserves and hope you don’t get to where you don’t have enough to cover discovered damage.