Just a thought, though - would it behoove you somehow to refinance your mortgage and incorporate the second mortgage into it?  

One knows the construction of buildings.An appraiser may incorporate an inspection report in his findings, but I never saw an appraiser in a business suit crawl under a crawlspace in a house.Maybe things like that were happening during the insane bubble, but I'd bet they went back to their more conservative ways.  

If you allow your tenants to write whatever they want on the checklist, do you also agree to incorporate their findings as part of the move-in condition of the house?

So yes draft addendum incorporating the rent raise  and any other addendums you feel are needed.

How do you incorporate late fees on M2M leases?

It's very inexpensive and when it rents you can incorporate the mini model items into your own home.

It's not only inspiring to see what is being done but also opening my mind to how I could make a business plan that incorporates both sides.

In my scenario the  "hard money lender" are the friends and family you want to incorporate into your your financing. you can avoid paying a ridiculous monthly rate through negotiating your terms. rather than pay them like 16 percent every month on the money they invested; pay them 20 percent at closing. 

There is no timing to the income-expense cycle incorporated. 

Depending on the scale of your investments and future plans, it's worth doing a bit of research on the best state to incorporate in.