(2) What happens if your rent to own tenant stops paying?

Mind you, both interpretations can be right, even simultaneously.

With that in mind, I would save most, if not all of the cash flow until you have enough to do the renovation.   

STR can be exciting from many angles - Cash Flow, Appreciation, and best of all.. having a place to visit while renters pay down your mortgage (even near the beach!).

And I always see fixers at a decent price (if yo don't mind putting some money into it).

Is it segregated (only my funds in the account)- do you have an attorney on staff that reviews exchange docs and keeps them current - what is the typical time for your staff to complete an exchange ( you want to get a feel for if they are understaffed and can they get the work done on your time frame)- how many exchanges do you do a month- what is your errors and omissions insurance through, can I get a copy- what is the amount of your fidelity bond - for each occurrence- what protections are in place to prevent wire fraud- will my funds be used by the company for outside investments (goes back to the type of account funds are held in)- who will be my contact during the exchange (goes to customer service, you want one contact who you can reach by telephone)Investors should keep in mind that it is their money they are placing with a QI to hold for a short period of time and be sure they feel comfortable with the company they choose to perform this role. 

Mind if I DM you the property to get your opinion?

If you have a tenant that doesn't pay and you have to evict, you might lose 3 to 5 months of rent payments plus have make ready costs of 5k to 6k depending on what they do.   

For example, a buyer putting 20% down on a $500k home would pay around $500k in interest over the life of a typical mortgage at current rate around 6.5%.

Insurance is paying for the stay.