Make sure the house breathes and has good air exchange.

What you're asking for is free ongoing service (yes, it is service, because it takes our time) in exchange for one annual paid job.

Basically the landlord (you or I) convince a tenant to vacate our property in exchange for an agreed upon sum of money.

That eliminates the 1031 exchange as an option.I've used lease options in the past personally (pre-Dodd Frank) and was always careful to 1.

There will be a cost to the loan, but this will be hard to estimate and lots of variables. as Chris said, many times the lender will wrap the loan costs into the note to save you cash, ideal on a BRRR, but you will likely pay a higher rate to do so in exchange.

I could try offering a month of free rent in exchange for terminating the lease, but again, don't think she's interested in moving.

The purchase is part of a 1031 exchange with a qualified intermediary in place and we are well within the 180 day closing period.

In my experience, you only have to register a LLC as a foreign entity in NC if it is a foreign LLC investing/acquiring a loan on North Carolina property. 

I will leave my $60k in and take a $90/mo hit in exchange for a bit of waterfall and him finishing the project. 

Furthermore, old furnaces are susceptible to cracked heat exchangers so I would replace unless an inspection proves otherwise & we could wait.