Would it make sense to stretch out the rehab timeline a bit rather than have the house sit empty, either in its unrenovated or renovated condition?

Here you could make it a 10 day inspection contingency and stretch it beyond that.

It's a tough one as I know that it is a real stretch for her to pay the rent.

There are 6 Real Estate Agency's just in a 1 mile stretch of our Downtown, and I have spoken with all of them.

Many BP regulars don't like to have mortgage pymts be more than 50% of their gross rental income.To be conservative with a conventional lender don't exceed 36% of your gross income for all debt payments.Not sure if you are trying to stretch yourself or be safe.Safe is 50% of your gross rental income for income and no more than 36% of all your gross combined income for all installments.

Carpets need cleaning, stretching and smoke smells removed.

The bank we want to do the refi with will not count the rental income on these properties because we have not had it for 2 years, if we keep the $1130 payment and add a second mortgage payment it will stretch our debt to income ratios.

60-75% of market value minus repairs is not a deal to them by any stretch of the imagination unless you're adding some kind of other value to the equation for them.The value you're adding may just be getting them out of a house payment...but if they have high equity, it's not their only property, and they have only owned the property for 7 years it's unlikely they're really hurting for money.

I could pay off my current home to be converted to a rental (55K) but that is stretched out over a long 30 years at 3.75% interest.

I manage for family and friends and I am starting to feel a little stretched. :)