The upside of doing your own labor, you could even treat yourself to better quality of flooring so if you choose.

However, you must treat the deals you get that way just like any other deal.

I could then get a person in here with the intent to purchase my home which would incline them to treat this house like their own.

According to your agreement with him, he is a tenant and I would treat it like if any other tenant "living in the property" asked to be taken off their lease.

Luckily, using Kilz on it to seal it can fix it (same with wood); you might also treat with a urine remover product (spray on, let soak in and dry).Downside - an extra day for painting and letting it dry, before putting in new carpet.

I could then get a person in here with the intent to purchase my home which would incline them to treat this house like their own.

On top of typically needing at minimum first months rent and a security deposit.In my experience, if you communicate your intentions early, and treat people with respect, you won't have many issues. 

I treated this search once a week for two months to see the progression of bookings.The hard part is you have to scrape available data which means Unbooked houses.

My other question is will the banks treat your rental income as a steady stream or will they discount it.

But I would suggest waiting the 6 month seasoning period to get your money back or have a contractor give you a bid of say ( that 25K prior to closing on the property and the money be held with escrow) Now what I like about leaving it because you can cash flow a lot more money and they treat is as rate and term.