The other part of the is the tax implication when computing ROI.  

Not sure how to properly tell the tenant who's income doesn't support the rent that I do not want to resign the the lease with her. 

(The high bidder UW must have used in some part more favorable UW assumptions - either higher rental income or lower expenses.)3.

The market appreciates 3% per year.If you pay cash for one house and rent it for $1,500, after five years, you'll have earned $90,000 in rent income and gained $34,000 in appreciation.Or you can choose to finance four houses with $50,000 down on each.

The person does pay her back and she did report the interest income. 

For income verification, I plan to obtain a copy of the employment contract.

Even if I bought 10 more Indy properties all my net rental income won't add up to my W2 income (after taxes). 

I can't show income, but my credit is in the 650s.

Will the profit be counted as self- employment income or long-term investment income?

With you, and not leading with taxes!