If you find deal w/ seller financing, it's probably b/c all the sophisticated cash buyers wouldn't bite.  

Also, from all accounts there are the bigger players using venture capital and that eliminates the smaller person, especially if they fall just outside of the sophisticated investor requirements.

Based on the amount in dispute and the lack of sophistication of your contractor I doubt he will spend the money or have the knowledge to file suit.

Not to mention you need to hire people, reserve rooms, design compensation plans, do payroll, etc.  

You'll have to take payroll as well.

You will eventually have to get payroll set up to take a reasonable salary, as you suggested.

I have accounted for maintenance, turnover, payroll, bad debts expense, insurance, marketing, and various other miscellaneous expenses.

Certainly talk to a tax advisor and a sophisticated financial advisor before you take the plunge. 

FWIW, we've found proper screening to become significantly harder this year as the fraud has become far more sophisticated. 

Houston is a very sophisticated market where you will be competing with newbie/local/out of town virtual whole sellers.