They should be able to take the average rental rate for the area and apply it to their calculations to submit to underwriting. 

I have a couple that applied for my SFH. 

Don't forget that you'll be required to pay for an appraisal and usually required to disclose if you've applied for additional financing on that property.

I closed on one there last month and meets a 8% cash on cash when applying the variables you listed.

I don't know a lot about reverse mortgages but from what i understand once her mother passed, she had a period of time to make arrangements but she applied for extensions which i assume got approved.

When the taxpayers demolished their existing principal residence, built a new home on the land, and sold it before ever occupying it, the Tax Court ruled the gain resulting from the sale of the never-occupied home did not qualify for exclusion under IRC Sec. 121 (Court case: Gates).Not sure if Gates applies here, because nothing would be added to the formerly residential land, only removed from it.

@Ellie Narie have you asked the tenants to apply for rent payment funding? 

@Ashish Acharya   OK thanks - so I'm assuming this would also apply if there were no home on the land to occupy? 

The tenant screening process should be consistently applied to all potential tenants and is analogous to the underwriting that all investors have gone through when seeking a loan.

I'm afraid to apply for the pre-approval because I already had a credit inquiry last month and don't have much capital.