I have already been able to meet her inspector who she works with regularly.

Is it possible to get short term private money/hard money financing to pay the owner of the house in cash and then secure the FHA loan within a month to pay off the hard money/private lender?

The easiest and most secure way to do this for you would be for you to buy the house subject to the existing loans.

My original impression of rent to own was that it’s the same as regular rental, but with a buy date and additional funds being given as option fee.

@Amy Hu 1st step secure property.

If your goal is security and a retirement asset, then I’d consider leaving it as it is (if you can weather the coming Capex and any breaks in cash flow). 

You have the amazing advantage of knowing which streets in your neighborhood are able to secure long term tenants.

Some might require that the business operates regularly within the jurisdiction or have a physical presence there or have employees there. 

I guess if damage is done I have security deposit and legal recourse as well.

It depends on if IRS considers you an investor or trader. they look at different factors, I pulled court cases where they looked at these:(1) the taxpayer's investment intent; (2) the nature of the income to be derived from the activity; and (3) the frequency, extent, and regularity of the taxpayer's securities transactions (Kay; Mayer; and Moller)  A taxpayer is a securities trader only when both of the following are true: (1) the taxpayer's trading activity is substantial; and (2) the taxpayer seeks to profit from short-term swings in the daily market movement, rather than to profit from the long-term holding of investments.