Should Person 1 be compensated extra for the additional risk of taking on debt?  

But I'd rather wait those extra few days and get the property delivered back to me in good condition, then file with the courts.

If I kept it as a rental, it would pay for the mortgage, plus my rent and a few hundred dollars extra month profit.Thanks in advance for any recommendations and helpful suggestions!

but it doesn't actually have any consequence other than tacking on extra fees to the property tax bill.

While rehabbing, I spent a little extra money fixing things that could potentially cause problems down the line.  

If you're in a slower market, I've seen anywhere from $1,000 to an extra 1% generate interest. 

One of those risks is a bit much for my taste, but two is simply too much.Take your extra 25k, and put that into an additional property.

If there was water pooling in your neighborhood with all the rain and offshore winds pushing the tides in and your property is not much higher than theirs, then I would definitely consider additional flood insurance, which won't be that expensive if you are not in a flood zone, except, of course, for that $250 annual surcharge they just added for investment properties.Also, I actually do add earthquake insurance on my Virginia property as it is only like $20 extra per year and after that scare a few years back and seeing some damage to a relative's home nearby, I thought it prudent.     

Upstairs tenant buyer pays option consideration = 2k+, rent is $850/mo with $300/mo as rent credit (tenant pays extra $200/mo, I chip in $100/mo rent credit).

It will cost you a few extra dollars, but you will have that added corporate layer between you and the temp.