You'll never convince a tenant that they are getting a good deal, especially as a self manager, no point in even engaging in those conversations. 

Namely, that if a tenant (in this case accompanied by a whole family) ends up stop paying rent and I would be on the hook for both covering the mortgage and dealing with open ended legal costs and time.

During this renovation period would you, as the lender, want an Actual Cash Value or Replacement Cost policy in place?

What should it cost?

With on market deals like this, there are two scenarios: 1) you see something that no one else sees OR 2) everyone else sees something you don't

If this property is hard to rent, or is functionally obsolescent (only 1 bathroom, no yard, etc), or has deferred maintenance that will be costly, or is in a location that is not appealing to Tenants, then maybe a sale would be a good option in favor of a property that has better Tenant appeal, which will likely increase rent and avoid long vacancies in between Tenants.An option to consider....

Sure it will cost a bit more but if the numbers work, the numbers work.

@Kerry Baird Love hearing about others taking advantage of cost segregation studies.

You didn't mention the higher Florida insurance costs. 

Lets say its $270k and you are financing $220k and it takes a year at 12% thats $26k in interest plus other costs etc.