The numbers look very promising assuming you've accounted for everything the property needs but there seems to be a lot missing from the rehab like Adam already pointed out.

2) they rented a house with a water softener ("we intended to move it") and checked to make sure it worked and was staying--it wasn't but that wasn't mentioned to them3) they rented a house with a heated pool, learned the heater didn't work and asked you to deliver what you promised. 4) you say "we want to keep our equipment in good condition" and use a regular pool service--but you haven't kept it in good condition (the heater didn't work and you didn't know it) and regular maintenance is a  minimum standard of professionalism, not an above and beyond thing Now, I'm not saying they ARE reasonable or that you are the bad guy, but part of what set the stage for this is you not delivering the product you promised, then being irritated at the tenants for asking for what they were promised.Flip this around to their position for a second: they show up, there's noticeable damage that wasn't there before, lots of stuff they thought worked didn't, landlord argues about making it right and seems not to think it matters, contractors don't seem to respect them or their time (why do you believe the owner not them by the way?)

Lender may also require the transferee to sign an assumption agreement that is acceptable to Lender and that obligates the transferee to keep all the promises and agreements made in the Note and in this Security Instrument.

They collected their half and the renter promised to pay me directly.I have a long string of text and email messages from the renter promising to pay, and even a false claim of dropping a check off at my office.And then he stopped responding to emails, calls and texts.After more than 2 months, I finally filed a small claims action against him, with an estimated hearing date about 4 months away. 

We all know lenders don't give loans away to people with bad credit, but the credit is ONLY bad because of the loan the bank reported when it reached maturity, instead of the promised HELOC and refinance.

I promise to return the call :)

I'm looking at the big picture at what this could mean if i become successful in this business ( more time for my family, keeping promises about vacations to my kids, not needing to work 7/24/365, etc)... any and all advice would be greatly appreciated.

She might promise the moon and delivery Hell. 

I'd either ignore him or tell him you'll the $11k out of the promised returns he owes you.

My local bank promised me the moon and then when they went to their investor ended up having the same rates/criteria as Quicken and the big banks I spoke with essentially 5% interest, 30 years, 25% down (after telling me they would take 15% down for the entire first month working on the deal).