The last one was an unforeseen benefit that we did not think about regarding our guest house rental!

In my opinion, I would make sure they understand the risk and unforeseen timelines that need to be pushed out due to surprises with the project/rehab.

All cash or Banks Money - home inspection first, It can save you thousands dollars of unforeseen issues.  

I agree Shaun, rehabs costs are already up around $100K without doing the new boiler and a/c, leaving about $65K for profit...and I'm going to assume there will be some other unforeseen issues that will come up anyway..I agree that if I dress up the radiators, then I'm hoping a buyer will be good with that.

Otherwise like Chris mentioned look at doing the 1st for just a bit more than what you were planning to finance if you had already sold your existing home (do it for a bit more than expected for any unforeseen shortage when you sell, like seller paid borrower concessions, repairs you didn't expect, ect) then get a 2nd mortgage to finance the difference to avoid the PMI and pay off the 2nd when home sells, might want to consider a HELOC on the new property so that once paid off, you still have access to the funds if ever needed and while not needed you don't pay any interest.  

If we sit on the market too long or other unforeseen problems show up in an inspection, we still may go the rental route rather than take less than what we think it’s worth.

It is in your name and you personally would be held responsible for any and all liabilities without limitation.An LLC, whether single member or multi-member, provides a limit on the liability that a member is responsible for and removes extra liability from unforeseen incidents.

I would say that is more than likely due to not knowing what they were doing and evaluated the deal poorly, or just some big unforeseen happened.  

If the AC dies tomorrow, they're only going to be so patient for you to repair/replace it, so make sure you have the cash to cover such unforeseen expenses. 

Overall it sounds like you have a fairly good method for figuring your comps.For a flip then yes you want to leave yourself a cushion for your profit and/or unforeseen repairs (along with subtracting out your known repairs).