As long as you have 2 years of tax returns showing your income you'll be fine.

She is patching and returning everything else to move in condition (why do people have to hang stuff on every wall!!??)

Question: Do I have to return the security deposit back to this Tenant ?

Typically, conventional lenders will not count rental income until you have two tax returns reflecting that income.

So you could start out that way and then maybe not need one.Or you could short sale it, etc.Rehab would be the last ditch effort I would ever consider.Location, condition, etc are all known before you ever buy, so it not like you HAVE to buy it or will get stuck with it.Do your DD, REAL DD, not this electronic nonsense and youll probably be okAnd on $5k, a 15% return is only $750...

He held my hand through the finer details of getting this thing done and asked nothing in return! 

Even assuming someone paid all cash here, it's only about a 3.5% return based on their stated net income! 

The return needs to make sense but depending on the area you might settle for a smaller ROI but more of a potential appreciation play.

Need him out to sell, will be returning the money and starting the process.

My initial projections based on a buy and hold analysis are:$1550 a month in income(Lots of assumptions here)$904.78 monthly expenses(Including maintenance, management, and the vacancy rate)$645.22 monthly cash flow23.45% pro forma Rate$9240 net operating incomex 50% for expenses equals $775Monthly interest/payment equals $124.78Total monthly cash flow using 50% rule equal $65082.90% cash on cash return on investment30.90% purchase cap rateTotal operating expense $780 dollars a monthAs I stated earlier, the house is close to downtown and the State University.