I am equally happy with doing HML and they both have a place in my investment strategy.

Next, create a new rental agreement stating that the tenant will pay a base rent and agree to pay the "behind rent" over "X" amount of months_that equals to "_________" extra each month starting with "X" month.Your challenge will be overcome; and your fear, your father's fear, and your father's tenant's fear will all be overcome.

Initial Investment is defined as the Sales Price, NOT the Sales Price + the Cost of Improvements done to the property " So from the above statement, this seems to mean that the New " Cash Out " loan can NOT equal more than the Initial Purchase price for the property + the Closing Costs ?

I would agree with your approach, all things being equal.

Both units are equal with 800sqft.Rents:Unit 1 was rented for $750, lease expiring end of April.Unit 2 owner occupied, my property manager expected $950 on rent, I calculated for $900.So for both units I expected to achieve $1800 in rent, and hoped for $2000.

In the same area, semis are going to be cheaper than detached and assuming of course lot sizes and sqaure footage are equal, I wonder if buyers of high priced, fully renoed properties prefer design over actual dirt/lot size which requires maintenance, gardening etc.

These numbers come out to about $534/mo payments on that, which with your rental income equaling $750, you'll have around $216 leftover.

If they do cancel early you want to see an early termination fee equal up to 50% of the remaining lease.

I have three options:I can sell to my tenant - most of my tenants are interested in home ownership, eventually.I can sell to an investor - I only rent M2M so I can offer a home that produces income or can be vacant in 30 days notice.I can sell to the open market - most of what I own is SFH, so I have a broad market to advertise my house...I can also sell my home below market (because my purchase price is right) to get out quickly if I need to and still make a considerable profit.Multiple properties may incur higher PROBABILITY of a bad thing happening, but it will yield you a higher PERCENTAGE of return on your investment IF you stick to your investment rules.My largest "contrary to the popular belief" is that I buy not to generate large amounts of cash flow (although each property does @Justin Fox brings up a good point that it isn't just what you have left after you pay PITI), but to keep my equity safe and building as I own and maintain the property. 

Our group has a total of 4 equal partners and we have formed an LLC, however banks will not loan to our LLC for a single family home.