Or perhaps have them pay an extra $50 a month, and then credit them if they overpaid at the end of the year?

This way, your rental income supports your next purchase, and you don’t need to save as much for down payments.Financing: Focus on improving your credit and saving for future down payments.

What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.?

I deny ALL smokers--they are NOT protected.No attorneys...they are not protected either.No evictionsCriminal history considered.

If need be, will bid it up and take title to the property since we are next in line to receive any overage are credited back anything above the tax amount. 

Building a credit history...all on point.Things that I would also start looking at: where do you want to invest - locally, nationally, internationally?

They handle things like getting a refund to your credit card at home depot with ease. 

It’s a straightforward way to access the funds, though keep in mind that interest rates may be higher since it’s a rental.Alternatively, you can consider a HELOC (Home Equity Line of Credit), which gives you flexibility by letting you borrow against the equity as needed, similar to a line of credit.

Verifying last 2 years of rental history very important!

Verifying last 2 years of rental history very important!