I live in one unit and rent out the other, the FHA isn't a loan extended to businesses.What type of property are you looking to purchase?

And most of us buy properties where there is little to no risk of extended periods of vacancy. 

If they only do a 12-month lease, they will get a renewal fee every time the tenant extends/renews their lease for another 12 months. 

What if something tragic was to happen and you couldn't work for an extended period of time.In my opinion, I would take your 300k of your 350k in cash and throw it at the mortgage.

You'll encounter at least 2 large CAPEX out of pocket costs during that length of time, which means you'd be adding at least another 8 - 10k on top of the 50k cost, which would extend your recover time to at least 15 years...if all else goes perfect.It won't, so ad at least another $10k over that lifetime for misc. repairs and vacancy costs, so that 15 year recovery time starts looking more like 17-18 years. 

Coverage would not extend to taking preventative measures to alleviate the circumstances that caused the problem."

Howdy.Based on your level of experience, you appear to be either naive or greedy or remarkably optimistic.Perhaps 3 points, 8.5 to 10 %, 15 to 20% equity stake, and a term not to exceed 1 year non-extendable.

However, if the contractor does not and busts the agreed timeline, the incentive fee is waived, and every day or week that the project extends, the contractor losses $50 (just an example) per day or week.

An experienced real estate investor could possibly do that, but there are many properties where the seller represents the property line as "about 100 feet or so out in the woods, past the fence" only to learn their actual property doesn't extend out into that open space.

My thoughts are to ask the tenant to extend the lease for 6 months with the option to buy with owner financing at end of the term as it will give me more time to get an attorney to put together a contract etc.