Of course I could just manage the money and send him the appropriate amount but what about when tax time comes and he needs to report his additional money that he has coming in?

I will be sure to reach out in the future when appropriate.

For future properties, would I buy with my house credit and then use a hard money lender for the rehabilitation only?

And the facts of your specific situation could indicate a shorter (or longer) appropriate hold period.The key is that you are 1031ing into an investment and then converting it into your primary. 

Well.... i would never presume to make a decision for a tenant nor try to channel them to make a choice - if he wants the place he can apply and then you can deny him if appropriate using your written criteria.  

While the house is being rehabilitated, will I need to start making mortgage payments while it’s under construction or does it start once the house is done?

@Jeni Nikolova I consider any time after the tenant gives notice as appropriate to start showing the property.

Of course, make sure your contractors are all properly vetted and have the appropriate insurance.  

If she is a fair dealing and decent person, what I would do if it actually created a meaningful hardship for me (since I am also a fair dealing and decent person) is that I would discuss exactly this cost I bore / will bear with her and ASK if she was cool with an appropriate charge.

Assuming I did my research/math right and ARV gives me appropriate amount of equity to pull out most/all of my cash, how can I refinance in less than 6 months to get to the final R to continue building momentum?