Your property your rules, you can do whatever you want but if you are looking for a "fair" solution you can split the yard with a fence so you each have your own private space.

However, if the tenant pays in time and follows the rules you are probably better off keeping them as you’ll avoid the deferred maintenance/turn over costs right now.

As a general rule, then, you don’t want to buy properties from unmotivated sellers.Finding motivated sellers is not as hard as it may seem, though it takes some work.

And sometimes using hard money at a reasonable hard money rate is well worth the end result - especially if you're doing a significant value add project.The most common way given your scenario (I'm guessing you've already completed your sale and started your 1031 exchange) is to do an improvement exchange. 

-> 0 to 10% (model set-up for varying ranges; I can minimize my managing myself, but cost is still my time)Maintenance & Repairs -> ~10% (rough guess - 5% for maintenance and 5% for cap-ex improvements)$500 for other misc per yearAm I missing anything?

If I understand it correctly, she will have to pay taxes on the selling price minus the purchase price, cost of any improvements, and 500k federal exemption.Are there any other strategies which could be employed to reduce the tax burden?

My general rule is a hard pass on anything violent, like battery. 

There have been no improvements or repairs made on the home.

The best suggestion I have is to spend some time comparing your units to the others in your immediate area and don't over-improve as often there is a natural price "cap" in the neighborhood and regardless of the small upgrades that really do improve the living experience, it's hard to make them into the rental rate if you are near the top of your market.

(Many won't, and don't bend the rules for anyone, that NEVER works out.)Check out https://www.biggerpockets.com/renewsblog/2013/01/27/tenant-screening/