Admittedly, if a nationwide recession hit, and property values and/or rent dipped 15 or 20%, this person is subject to loosing 15-20% of $900k in properties, rather than the widow's 20% of $225k.Then, if you use the BRRRRR method, the cash-out refinancing, once you have enough equity (usually through remodeling the property, but sometimes through market appreciation) allows you to ideally grow a portfolio of rentals with 100% financing....and zero of your precious equity left in the property.....I know of a BRRRR investor that turned $80k cash into 30 rental properties worth about $8million ($5million in loans, $3million in his equity) in 5 years....granted, he bought at the bottom of the 2006-08 recession and benefited....but much of it was the buy at a discount and remodel profit.Then decide if the risk/reward is right for you.You can say "look what I did with low leverage" (slower)....or "look what I did with maximum leverage" (faster).

Are you  concerned about loosing that months rent?

This area is growing in leaps and bounds and I'm hoping I wouldn't need to hold the property for more than 5 years.  

Contracting everything out, I would be happy to just not loose money.  

It can make the difference in a profitable deal and loosing your shirt.  

Make sure the subfloor is nice and tight, so put a few extra screws down where it is loose.  

A few of the bricks are loose.

Option 3 was what I first thought about, but putting it into respective if her sister all of a sudden appears back into the equation I don't want to loose my rehab investment.

If I go through with this and loose money, I'll probably get discouraged and not be able to continue buying more and more properties, like I'd want to.

This deposit serves as a protection for me  as if the buyer defaults at some stage, he looses that initial deposit and I foreclose on the house .