A few additional things to consider between the two loan types: prepayment penalties, probability of closing, points/ fees.... and vesting (LLC or personal). 

Real estate websites such as Realtor.com, Redfin, and Zillow can give details on recent sales in the area.Use Real Estate Investment Calculators: Take into consideration utilizing additional online real estate investment calculators in addition to the BiggerPockets rental property calculator.

I also see that some have additional reader fees that come with it. yikes! 

Should I add it as an addendum? 

The goal was to initially do a small renovation and add an additional room and bathroom to the already existing older home. 

Additionally, with a median home price below the national average, Cleveland offers affordability that may be attractive to some investors.

If you want to protect your friend's capital as if it were your own, you'd want to:1) Secure the loan with real estate in the form of a deed of trust or mortgage (depending on the state the property is in)2) Obtain property insurance binder with your lender as an additional insured3) Obtain a lender's title insurance policy protecting them (different than an owner's policy) and transfer all funds through an escrow closer or real estate attorney (depending on the state, the requirements for closing may differ)4) Use a real estate attorney who also practices private lender law in the state the property is located in.

However, if you're using a discount company that's allowing you as the owner to set the rent price, approve or deny apps, etc. then your issue could be one of many things. 

We are currently working on how we are going to budget for these additional replacements.

My recommendation is to hang out with Alchemy of Money for a CPA and Engineered Tax Services for additional tax strategy.