As an another way to skin the cat.

When I compared his math to mine, we end up at almost the identical profit margins, so in essence, we use the same formulas.Lets use this as an example:Purchase of $200,000Rehab of $40,000ARV of $320,000That is 75% all-in.I have 5% agent fees and 1.5% title/escrow/transfer taxes/misc for a total Resale cost of $20,800 - Lets round to $21,000 (I ALWAYS purchase a owners title binder on acquisition to cut my title costs on escrow, if not, expect to pay 2% total.Assume 12% interest and 3 points for financing, plus $1k in fees and assume you can borrow 100% of purchase, you bring $40k rehab funds for skin in the game.

If they aren't living in the space, they don't have a lot of skin in the game if you threaten to evict, and its much more difficult to serve notice on a cosigner - especially if they are out of state.

If so, how do we ensure the tenants have skin in the game (and not waste our time and gas)- should we ask them to apply first before scheduling an individual showing?

With significant skin in the game and due diligence on my part, I don't see much risk in this.

It is easy with someone with no skin in the game to give advice, but the lawyer will have to deal with malpractice issues if he is wrong. 

FNMA, GNMA underwriting guidelines allowed (otherwise) UNQUALIFIED buyers to get loans; those with sketchy credit, those buying too many investment ppties with too little skin in the game etc.Remember, only a couple of years ago, (only a day or so ago on this and other sites!)

He probably wants you to have skin in the game so you don't back out of the deal. 

Buyer defaulting on a loan still in your name, your credit, you'll future ability to borrow with a Ilan in your name, legal consequences, buyer's skin in the game, etc.As a buyer in this case, your seller's credit is not at stake do neither should be concerned.Your job is to negotiate the best deal for your team, not theirs. 

Plenty of ways to skin the cat.