So you can have tenants paying in different ways and it doesn't cause any hiccups. 

With the above factors, the vacancy rate will start creeping up from the historical lows of 1% which will cause rental rates to flatten or begin to decrease, which in turn should translate to a cooling of purchase prices. 

There are A LOT OF TRAPS along the way that can/will make the deal fall through (and cause you to lose your earnest money).

This could cause you to have to wait 4-6 weeks after closing to access the funds in the escrow account to pay you contractor.

What would cause you to pull the trigger on a property like this?

I’m selling my portfolio and a few properties have no security deposit because funds were used to correct tenant caused issues.

The attorney I spoke with laid out two paths: Option A, we give her formal notice without cause.

There was a "Savings and Loan" scandal back in the early 80's (you can google it to learn more) but that caused the state of Texas to write specific rules regarding cash out loans.

Trying to figure out how to declare on my personal taxes without causing any red flags.  

If no surprises, you could wind up with $50,000.What causes rehab to be so high?