I would make any offer contingent on a lease agreement executed at closing but even if I got everything I wanted in lease negotiations, I still can't seem to get past item 2 above.

Had 4 hours to pull together cash in order to execute on the deal.

Base your decision on what your plan is and execute as best you can. 

So many people stress cash flow but don’t forget the bigger picture of once you execute this deal someone else (renter) is buying you a house AND giving you $70 a month.

Often they will be hesitant to actually use the Due on Sale Clause for a performing note, but it is their right to execute this whenever they want.

I rehabbed the place, added a studio unit, took rents from $2400/month total to $5700/month - all in 12 months - and sold it for almost 4 X of what I paid for the building.There are many ways to create add-on value, but it takes understanding of the market, honing certain skills to execute the plan and looking specifically for these kind of opportunities. 

In order for a lease to be valid, it needs to be between the OWNER and the Resident, potentially executed by your property manager/designated agent, You don’t want to write a non valid lease for some fake privacy you won’t get anyway.

Otherwise, you become the big bad owner evicting the two sickly senior citizens in their moment of vulnerability.

(They should absolutely be two separate agreements, by the way.)I don't see any problem with the lease agreement if the landlord dies, as long as you have an original and properly executed document.

Then I would get into what exactly is their business thesis is and how they execute on that strategy.