Since there is so little that needs to be supplied, I would be very happy to cap off the circuits to the basement and hallway and the front porch light, and simply put in motion detector battery operated lighting in these areas, and tell the tenant to use the hookups in her kitchen, and get out of the basement.  

It sounds like you've experienced the dilemma a lot of us do - that what you do to pay less in taxes (reduce income, accelerate/increase expenses) ends up hurting you when it comes time to apply for a loan.The good news is that if you own your own business and know you want to start usingou bank loans, you can start making yourself look better by increasing your salary, etc.Once you feel more comfortable with RE investing you also definitely might benefit from looking into a Solo 401(k) - but I almost hesitate to mention it because at this point it could just complicate your life and distract you from learning more about RE.

I also put in a contract on a duplex.

I also put in a contract on a duplex.

You put in $6,550, 10%, you're getting 17% cash on cash.Consider your time to manage, but you have a tenant buying your house too.Another point with older folks, they can end up in a hospital or nursing home, many end up receiving medicare/cade which the must qualify for.

Using Shawn's help we put in an offer on our home sight unseen.

Once you have that letter, you can go in a put in an offer.  

. :-)I just don't think I could risk all the effort we've put in to building this portfolio on one deal. 

I would put in the terms that it was due back in 9 months and have had good experience lending on a flip with this person before.

I understand that there will always be risk (as with any investment) and you need to put in money to make money, but I'm just trying to do my due diligence and make sure I'm making the best decisions without letting my excitement blind me.All that said, what would be the best course of action?