If not, you can rent it at market rate to the next person that has been screened and meets your standard.I also wouldn't offer new flooring and paint for a tenant that is so far below market.

and that would cover grass cutting in the summer and a certain amount of their time on a monthly basis if I needed them to let in/supervise the plumber or handyman. 

When I screen any applicant that does not qualify I reject.

Need more info as to what exactly will the $130k will cover that the $86k will not.And the raising the rents *over market value*?

Elise, I am from NJ and my properties are in PA, my PM has never charged that. 1099-MISC is for sub contractor when you pay them, as a PM you are not paying owners because we own the property, we pay you and if anything we should be sending that to the PM, but you should be professional enough to report your income, that income for you is subject to SE tax which you would have to pay. if you are going to charge your customers to cover that cost on top of your normal rate you charge, you may not get any business.

The lease up fee is needed as it's actually a lot of time to market, show, screen, lease and do the move-in etc.

If they are near $200/ month, I expect them to at least cover water, sewer, trash, and basic insurance. 

I am looking for approximately $30,000 to $35,000 to cover all repairs/expenses.

Especially in Florida when every year (almost) they suffer this kind of threats.As a flipper its very hard to find insurance company that will be ready to cover your house.As a home owner for rental: How much will the insurance company will cover in case of total disaster like this?

In Chicago, applicants with vouchers should be screened the same as any other applicant.