While both are pernicious and potentislly dangerous, the former has the most impact on people because the broad audience has a high percentage of people who are dissatisfied with their present circumstances and are sold in the idea that real estate with fix that. 

But (under normal circumstances) when her heirs inherit the house that tax obligation would disappear.

I don't take any cash out of the rent since that method seems wrong for two reasons:1 - If I rented a property for 900/month, and took out 10% for my CR, that would mean at the end of a year I would have a whopping $1080 in the account (barring any unforeseen problems during that time period).  

Nothing else can enrich, and bless, me like helping someone who truly needs it.Our project this year has been a retired missionary couple in Honduras who take in girls from horrible circumstances and raise and educate them.  

The fewer items the association is responsible for, the lower your fees will be and the less chances of a major spike down the road due to unforeseen circumstances.

The borrowers must occupy the property within 60 days after closing and must continuously occupy the property for one year unless they can document hardship or extenuating circumstances. 203(b) is what most people call "normal "FHA loans.  

Concerned I may run into some unforeseen problem( banks are funny).

In your scenario, if my circumstances permitted, I'd be tempted to pull out as much cash as possible now and refinance it again with a conventional mortgage (historically low rate); then rinse and repeat, without needing to wait for your cash to start accumulating first.  

Whether or not they will...I don't have my license yet (working on that), but given the circumstances of the transaction (not representing an external client, an innocuous mistake based on inexperience with this type of transaction), I'd probably be looking for a new broker if they wanted to charge me more than simple, reasonable expenses.

You can get a 5-year guarantee on new construction rental property under the right circumstances (http://www.biggerpockets.com/forums/517/topics/174...).