It will generate $400 month of cash flow once we move out and our total cash contributed to the property to date is $14,000.

I'm a developer - buy, entitle, permit, finance, build, operate larger projects - but regularly have to deal with the same thing you're asking about - how can I fairly compensate someone for their contribution to a project? 

You could use the listing agent for both sides and try to negotiate something....maybe a 1-2% reduction in commission which could be a reduced price by that much of a seller contribution to your closing costs.

What kind of improvements contribute to the house value the most?

The negative for this is that it contributes to the increase cost of housing in Austin.  

Unfortunately, the prices compared to the rents don't quite make the numbers work with this idea, since my grandma has such a low fixed income and can contribute so little. 

@Nick CobleIf you are contributing money to your LLC or Corp you are doing a book entry on the capital account of the member or shareholder.If your entity is taking a loan from you (ie with at least minimum legal interest) then you would sign a note.

This was the worst house on a nice block and it feels good to be contributing to the good of the neighborhood :)

If you plan on re-contributing the monies, you may end up re-contributing at higher valuations (stock market), thus losing out on that economic benefit.

I appreciate everyone for their time and what they contribute to the community.