If you are including coverage for this peril, the cost is going to be higher. 

I would definitely get a survey regardless even though the title company will except from coverage the encroachment.  

Securing and confirming coverages is a must when dealing with any and all contractors and service providers.

A title policy to an LLC that didn't contract may not cover part of the title coverage that may extend to the contract.Not saying that a property can't be set over into a LLC later on, that is a contribution to the capital account and taken in after the acquisition.

Credit unions or portfolio lenders typically will lend 65-70% ltv as long as dcr (debt coverage ratio) is 1.20-1.25 or greater.

You're essentially the bank in the deal so you'd have to be sure taxes were paid on time, the house is insured with appropriate limits and coverage, and she is maintaining the property so it does not lose value.

If the fact that a DOS clause is/would be invoked if the insurance policy changes, I would walk away before potentially diminishing or even sacrificing coverage by trying to “skirt” the correct way to insure the property.

After a trip to the Harris County real property records division, I found that external sources have, in some cases, better and more comprehensive tools than even the county has at their disposal.  

At 10M and more, it is more appropriate to use a stress testing model to eliminate or assume bad debts and look at coverage ratios, liquidity assumptions, you'll see that if certain loans go sour there are different effects on the portfolio and from there you can adjust to the risk perceived.

It becomes an installment contract when the price is credited by any payment and DF mentions ANY transaction that  attempts to circumvent the intent of the Act is also covered.I agree with your atty that it is best to run you deals as an agent, you will then have E&O coverage as well, or should have.