I would tell her the home isn't meeting her standards, so she should pack up and leave.

I'm not making that up, that's the qualification standard that's applied.

Keep in mind, if there is enough depreciation (IRA can't take the bonus depreciation, need to use standard depreciation schedule), that depreciation might negate any positive income.

Since you posted this under "house hacking", then you might be looking for a standard type of financing.

A qualified professional appraiser will generate a comprehensive analysis considering factors such as sales comparisons, highest and best use, market conditions, and income generated following Uniform Standards of Professional Appraisal Practice guidelines.

the house has a bunch of equity, being worth about 750k when fixed up.I  know that on a standard convenetional mortagage foreclosure, there usually additional fees such as unpaid interest, attorney fees etc, apart of the princiapl balance.Is there a way to conservatively assess what will be the actuall "Pay-off" on the 1st?

•Spreadsheet Formula:•While there’s no standard spreadsheet, you can create one using the following steps:1.Determine Original Roof Cost: 2.Calculate Accumulated Depreciation: Based on the original roof cost and the number of years it was in service.3.Calculate Remaining Basis: Original roof cost minus accumulated depreciation.Note: TurboTax may have limitations with complex entries like partial dispositions.

Pretty much every time I talked myself into making a compromise on our minimum standards I regretted it later.

Lower the price, not your standards.

Here in MD (and I think most everywhere elsr in the country), a Realtor can prepare and provide standard lease forms and disclosures.