We have to be very careful as we supply non resident investors only and don't want issues for overseas clients down the road. 

That is even more costly than a HML.I am not a HML fan, although, in the business of flipping and your ability to get in and out in an absolute max of 6 months (should be 3), you are safe, unlike getting a hard money loan on a buy and hold in hopes to refi it out down the road.

An 80 y.o. lady who seems in good health; no cane needed; good hearing and responds; filled out most of the application (size of print is around 12 point) with her glasses on and an intelligent conversationalist.If I picked the 80 y.o. lady, what kind of complications will I be running into down the road?

Basically I would be getting the two lots (#3 & #4) for pretty cheap (as there is a rental cottage behind the restaurant on lot #3 to help pay the note off) and have a business to sell down the road.

If it flows to an IT instead, the road stops there.

Find a tenant with a clean history that can at least plan for a bump in the road.  

I paid cash and own the property outright and can't afford the loss right nowWouldn't selling the property and receiving some of your cash back be better than having the property free and clear but having to put money in it year after year and still taking a loss down the road.  

I feel the tenant got off easy simply paying the deductible, you could have more expensive problems down the road.

I have been down that road before , cost me too much t .

Knowing the current traffic count on the road both ways and what is building up around it will give you an idea of how long the land would be held before being able to sell off.