Imagine ONLY a 5% increase.

Let me explain that better, imagine your rehab is $100k, you would need to do part of the rehab, maybe $10k, and then you can get the funds for those first $10k reimbursed so you can keep progressing with the rehab.Given your experience, I would recommend you start with a moderate or light rehab, mostly cosmetic work so that you can do it yourself and won't get your profit decreased by hiring third parties.

I imagine if I was a little less accommodating it would be less work.

If you feel you can bill separately for water if metered you should have no issue simply adding a flat water fee and I’d imagine the $17,800  could go a long way in a 2 unit building for upgrades that would have a greater impact on revenue. 

I imagine it will always.

I cant imagine a client telling me they will sue me for 20k. 

As you can imagine, we already have an attorney who specializes in real estate and an accountant who is well-versed in rental property accounting best practices (but she admits she doesn't have a lot of experience on the private lending side of the business). 

These folks are imagineers that have a real estate empire in their own heads.Many folks that fill out the "Find a Lender" form just want to talk to someone for educational purposes and are not interested in actually purchasing a property.

If they are not paying (I imagine that is the issue), will you go through the whole eviction process over the next few months versus giving them a few hundred bucks?

Imagine your tenants paying 100% towards the principal owed for 5 years.