With 6% in commission and 2,300 left over in closing costs, it could be a full payoff so, i'd not spend all my energy on the short sale aspect.The only one that stands to gain in this is you, (to make a few bucks for yourself) and having her follow through with HAMP then doing a lease option with you, could put her into trouble with the Feds if she lies about her intent as it relates to the property and occupancy.

Electric should be limited to community lights etc.

The exceptions being that on anything over a single family, you may have the added expenses of providing water, electric and or gas.

The issue is going to be the plumbing drain lines and electrical.

I met with the inspector and told him what my plan was and that I did not need him to document the little stuff like missing fixtures on holes in the walls as i was going to renovate all of it i just wanted him to hit the big ticket items the 3 HVAC units, roof, structure and electrical system. he said he could do that for $100 I was sold. 

In response to Mr Ramsey's quote, assuming I'm understanding it correctly and it's meant to be "sail" not "sale" (if it is "sale" it may be some sort of play on words that's going over my head), I think the partners that started companies like Edison Electric, Warner Bros, Hewlett-Packard, McDonald’s, Microsoft, Apple and Google might have a few things to say.  

Use the W2 to invest while you have energy and time.  

Its a good learning start for you and even if you pass it up you will know so much more for the next one,   Its an old house so you need information on what they have done with the electric plumbing heat/ roof etc.You are on the right track.  

This is our first time doing an FHA 203K we are not doing any updates to the kitchen nor the bathroom just making sure the house is functioning running new electrical wire, repairing plumbing, back stairs, doors, few windows, painting, roofs, garage doors, finishing wood floors, and cleaning.  

Does anyone have experience working with electric heat in cold climates?