If the foundation is literally sinking into the ground due to the weight of the upper unit, it seems to me like there's a greater-than-zero chance that some un-permitted work took place.  

Chances are your profit won't be as much as you thought ... if it is, great, cut them a check with a nice little note.

I'm interested in what others have found to be the best approach(es) for improving the chances of collecting back rent.

There are SO many scams originating out of Nigeria that your chance at having found something legitimate are extremely slim.  

Apply for a Conditional Use Permit to increase the allowable size of the secondary residence and sell the entire property with two homes on it.Both options require approximately the same amount of time and money to change entitlement, barring any neighboring resident opposition.I believe the first option would be more lucrative, however, the Zone Change is a 50/50 chance.

But not including DOB means that landlords will just reject for name match, or have to take a chance that their applicant isn't the same person as was named in the criminal records report.

The Quick and Dirty of Wholesaling Lease Options…Here are the basic steps:1) Find a motivated seller who wants to sell their house on a Lease Option…2) Get the property under an “Option To Lease Option” contract…3) Find a qualified tenant-buyer who has a good down payment and a good chance to get a mortgage in 6-12 months…4) Sign the Lease Option paperwork with the Tenant-Buyer…5) Assign the Lease Option docs back to the seller…6) Keep the Option Consideration / Deposit and give the Seller the first month’s rent…7) Put the Tenant-Buyer in a credit repair program with your mortgage broker…8 ) Deposit your money & move on to the deal!

Paying down principal is one way to prevent growing too fast too soon and it lessens the chances of you overleveraging.  

Perhaps it's paying for damages or taking out their compressor.2nd It seems to me that you would have a slim chance of winning if you actually took this guy to court.

If you don't use rent credits and use a simple lease and a simple option to purchase agreement chances are very good.