They'd likely both absolve responsibility for certain things and there will be grey areas where finger pointing could occur if something goes wrong. 

When a tenant re-ups a lease with us, we do an end-of-lease walkthrough before resigning to ensure the current deposit is enough compared to any damages that might have occurred during the course of the tenancy. 

Unfortunately this is going to have to result in a fired PM and an expense that should have Never occurred.

Will allow time for increased earnings and improvements in mgmt to occur.

If you have evidence that you or your tenants are risk, that makes a committal, or an eviction easier.I wouldn't worry about $50 rent if you think she might harm you. 

I offered to work with them to find a suitable sub-letter (one who meets my standard criteria) and explained that until the current lease expired, they would ultimately be responsible for the rent, utilities, and any damages that occurred in the property during their absence.

From a legal perspective, does one step need to occur before for the other in this scenario?

Potential data loss may also occur (computer crash) so make sure you do regular backup outside your pc.

What occurs is the seller acts as the bank and sells the property to you, but at closing you just pay her your down payment and the rest of the proceeds she takes back as a loan that you owe her for.

An alternate approach would be for you to take additional "back-end" upside that occurs as profits are generated or as your properties appreciate in value (and you monetize that appreciation).