I plan to make a contract that states that she has sold the home, or all rights for the home to me, for the $20k + taking over payments. 

The 50% rule or any other operating expense ratio you choose to use has NOTHING to do with debt financing or all cash.

This you may want to do immediately if they are non-existent or inadequate.

Therefore, some or all of the assumptions I've made may be incorrect.

After tenants leave and you find damage you will of course send them an itemized list of the cost of materials to fix the damage to explain why they are not getting any or all of their security deposit back.

Some investors don't need talent they just need a warm body to open the door so plowing through inadequate agent after agent is fine for them.

At any point, he could pay off a portion or all of his loan, which would have no bearing on your obligation to him.Wraps do trigger the due on sale clause, and that's a risk of the new buyer that should be disclosed.

You don't have to do all buy & hold or all flip or all wholesale. 

Is it easier to qualify if he occupies it or can he rent out both sides (or all if Triplex or Quad) and  thus allowing him to qualify for a larger loan?

I started looking at out of state properties (e.g. in TN or AL) and even ran the numbers on a few properties (positive cash flow), but I heard in the BiggerPockets podcasts again and again that you should invest in a property that is within driving distance.