Therefore, treatment will mirror your own personal residence (i.e. most expenses will be personal in nature and non-deductible).Any rent she does pay you is taxable in full with no deductions to offset.Then you contend with the gift tax issues.Generally not a good idea to rent to family, but if you do, make sure the rents are fair market. 

Due to the nature of the work it was expected and the guys didn't flinch at all.

It's natural to want to shift the responsibility for those expenses on to the tenant as they slice your profit margin for the year down to nothing and start to hack into the bone for a loss.And this one big reason is why self-sufficient handymen typically do well in SFR, especially the high-maintenance lower categories, while others do not.

I live in NYC and have been looking for alternative markets to invest in.

@Richard DiGirolamoIn most cases, holding passive, un-leveraged rental properties will not generate a tax reporting requirement.Rental income is passive in nature. 

We paid 8k for a 3.5 FHA DP, so not much equity in that sense.So obviously I'd like to know if that's even worth pursuing, but honestly I just want to wrap my head around the nature of the Cash-Out Refi - how would this be done if it actually (I don't think it will) appraised around 334k?

. :-)  I also know human nature.

An alternative strategy would be to borrow from your plan for the down payment (subject to the limits) and then you would obtain financing and own the property.

Naturally I'm looking for the highest possible ARV and rent but I'd be saving massive bucks if I can just stick to what's in there with the added ceiling fans providing air conditioning, and I fear that installing HVAC would not provide a sufficient amount of value-add vs. the cost savings of not having it installed.

Unless the company filed a lawsuit, which you haven't mentioned, they no longer have any interest in the property.If they recorded a lis pendens without filing a law suit the penalty against would let her retire in comfort.If they fraudulently filed a lien of some sort but you haven't indicated anything of that nature, again their penalty would be a nice windfall for her.If . . . she thinks that because they had a purchase and sale agreement from some long ago time, she is simply showing that she doesn't understand how things work.Make your offer, open title and escrow, and I'm sure the whole transaction will go smoothly.A title report will reveal anything of concern and a report is usually $50 to $100.