My financing requires a 3rd party appraisal.

The short sale addendum has language that warns all parties of the need to get creditor approval and the fact that the sale may not go through and that if it does that it could take an extensive amount of time to do so.I'm finding that less and less short sales are being approved these days.

I hear that plan a lot - Just need to implement it (Thats the hard part)I would recommend a book that a lot of people on this site recommend as well as you do seem to be jumping around a lot.The One Thing by Gary Keller.Good luck!

On #2, if there are mandatory capital calls and one party defaults, what are the remedies of the default - i.e. is there dilution? 

The offers you are getting are not all that great for a third party investor.  

But if I can only raise the rent by 4% (conservative estimate), then I'm just under the 1% rule.Right now, I'm learning towards doing the deal, as I'm sure I won't be using a property management company for a while (8% of estimates) and once I do, I probably will have been able to raise my rents to their full potential.  

No incentive for the tenants to conserve.

Assuming 60/40 split, and you end up with 40% (to be conservative) = $2,400 - $2,800, of which the house (broker) gets 20% - 50%, leaves you with at least $1,200 - $1,400 before taxes.   

That's assuming a conservative 15% Cap Ex reserve (it has a new roof and 3 of the 4 a/cs are 2 years old) and 10% maintenance reserve.  

Of course, my estimates for expenses are conservative, so that 3.6% might actually be 4 or 5%.