Both turnkey properties and properties requiring minor rehab can be viable options.

We forbid TV mounts, shelves, or items that require bolts, anchors, screws, or large nails.

I think I will not let him make this upgrade as a 5 year payoff would require over $100/month additional rent.  

@Jim LynchSome typical minimum tenant screening requirements look like the following, but it depends on your market:-Renter has a gross monthly income of 3x more than the monthly rent-Minimum credit score of 650-Renter must have no prior evictions-No felons (or other notable criminal history)There are a number of different tenant screening softwares out there such as Zillow Rental Manager, TransUnion SmartMove, etc.Be sure to complete an employment verification by contacting the renter's employer and confirm the details they shared with you, landlord verification (if they have a previous landlord), credit check, and background check.

To avoid reducing your lifetime exemption, you could gift equity incrementally, but this requires proper legal structuring (e.g., fractional ownership transfers).

If the property requires rehab, the Realtor and/ or Mortgage Broker will suggest applying, for a FHA 203k Loan.

Even a single family builds can vary significantly based on site conditions and required structure/design.

I have been able to find a couple of options for this setup though, they just require separate leases for each room and sometimes 2-3 months of rental receipts as well. 

I only charge markup on maintenance if it's a larger project that requires more coordination, supervision of the work, and inspection after completion.

Some areas allow commercially zoned properties to share one large septic system (think sandmound or gravel type system) or would they require an individual on-lot septic?