I did however put into their lease that if the lawn ever became neglected it would immediately be taken over at their expense by a company of my choosing.

Not to mention if your house doesn't appreciate, you still pay 20% of the sales price which will eat up a chunk of the equity you've paid down.

We would like to keep the operating revenue and expenses separate from our personal stuff but want to file them along with our personal tax returns.

Are there any other expenses that I should be accounting for or any way to verify that what I'm analyzing is a solid deal?

The issues on the inspection report were few and mainly related to safety which speaks to the quality of the rehab that was done (e.g. no expensive CapEx items). 

Smart investors increase earnings, reduce expenses, increase savings, and buy wisely.

I need to know what forms I need or what procedure I should take to ensure I get paid at or before closing. 

Definitely consult a local attorney as it can be expensive if she really has a case.

Earned income is pretty much W2 income - something you get a paid for actively doing.It's not about who you are renting to (ie. travel nurses) - it's the fact it is rental income in the first place.Randy

Do the work yourself do not buy a property that someone just paid little to nothing for renovated and now is asking Max market price.Find a TLC project and over time or when you get extra cash fix it up and renovate and higher rents will follow.