If giving the investor equity the circumstances get much more complicated.

There are no eviction-worthy offenses (as far as I know - more on this later) and she has told me that she will never voluntarily move out under any circumstances.4) The tenant is allegedly handicapped although I am doubtful whether she has any documentation to that affect. 5) Besides the aforementioned concerns, I am also concerned about legal liability over the same concerns.

Are there additional circumstances with the property and/or borrower that that make you think the lender would accept a discounted payoff?

Given these circumstances, I wouldn't assess a late fee.

In no circumstance is the banks' case worker allowed to sell a property to someone calling into the bank.  

Kristine Marie PoeYou bring up an interesting point, try to take care of the trust deeds with out going through with QTA... but in light of the circumstances, how would you find out who own's the notes?

It appears you're in a good place for evaluating the seller's circumstance for deal propositioning. 

Sounds like a different set of circumstances in your neighborhood though.If I were in your position, I may try to rent them as-is, and if I didn't have much interest after 2-3 weeks, I might go ahead with the repairs and new market photos.I wish you all the best with your ventures.

Real estate circumstances vary noticeably depending on the condition of your particular market.

I don't know the circumstances but when they said they were on a budget / can't afford it - etc.