We collect a percentage based on total income so if we collect $50 late fee and this client has a 10% management fee we keep $5 and the owner gets $45.  

The current situation sounds like she is promising two different people the house and wanting to collect payments from both which obviously isn't going to work.

He might know some resources in Chicago or surrounding areas. 

Since then the 3 homes have had a combined value increase of over $1.2M (the rentals being 800K of that), and we have collected over $300K in rent over that period of time.

Fair warning: I'm not a real estate attorney and I can only speak specifically for Tennessee as I hold a real estate license there.The act of bringing buyers and sellers together with the intention of collecting a fee is "brokering" a transaction.

they are paying far under market and cash flow would depend entirely on raising the rent.I'm sure I'm forgetting something, but I was hoping the collective BP hivemind might be able to shed some light on the further risks or implications of thus newfound info on my prospective duplex.thanks in advance!

In Chicago, there are management companies that focus exclusively on subsidized housing since it eliminates the rent collection issues, and this could be an interesting play in SB. 

Buy notes and just collect on the interest.There a lots of options.

I handle all accounts payable, rent collecting, maintenance coordination, leasing, etc. and was doing it all myself up until about 300-350 units. 

She’s got resources, but they’re limited.