I do agree with you being able to simply collect and no do much.

Otherwise, weigh your options with estimated vacancy and remodeling time, but how you may be able to mitigate losses longer-term with the higher rents you'll presumably be able to collect with new tenants. 

Quote from @Bob Stevens: Quote from @Henry Lazerow: In higher crime areas you can still find 1% but it comes with less actual rent collection/costlier issues.  

It is important to note that my business partner is a family member and we are aligned on pursuing whatever strategy is most optimal for our main goal of acquiring as many properties as possible collectively, regardless of ownership percentages on paper. 

For example, their rent is $2000, they pay me $1000, I then apply the $1000 to the renovation project, which they estimate to be around $8,000.How should I write up the lease agreement as far as collecting the rents?

I do recommend something to collect rent that is NOT check, Venmo, CashApp, Zelle one day one.

I remember even during Covid we sitting pretty collecting all of our Section 8 rent checks.....The County Wake housing authority blows the big one.

This is what I think I know:- The borrower can choose to pay off the note at any time (by selling the property or just paying off the loan with other funds), so it is important that the legal balance covers my investment and some profit- The borrower could file bankruptcy (can someone confirm that this will only cause delay, but not jeopardize ultimately collecting the legal balance of the note)- Most of these DOTs will have a rent assignment clause, so I could try to enforce that and collect rents from tenants (essentially manage the property) while I am holding the note and trying to foreclose.

If they fail to pay, then you can consider taking them to small claims court or filing with a collection agency. 

This PM will be trusted with the accounting, collection, and transfer, of tens of thousands of your dollars, or more.