So you should reasonable expect to pay all the costs for five more years and not get possession of this house until then.

I had someone tell me my business model was un-ethical because buying foreclosures kicks people out of their homes....

One of the things we do is keep my wife in a late-model SUV.

As the move out date comes closer and they appear to be struggling, consider cash for keys to help get possession.

Expected rent is approx $2500/month.Both are the same model- 5 bedrooms (4 up, 1 down), 2 1/2 baths (2 up, 1/2 down) and both are in very good shape, move in ready, etc.Differences:House 1:Finished Basement, but no bathroom in basement.Gas fireplace- selling point in COPaid-for solar installation (could save renter approx $50-$100/month on electricity)Small backyard with retaining wall and trees that make it look/feel even smaller (bad for small kids and dogs).Residential street but higher traffic since it's a "feeder" to the neighborhood.House 2:Better curb appeal from street Less traffic on street.Back yard is bigger, but feels a lot bigger due to layout (better for young kids and dogs (Everyone in CO has a dog)).VERY close to excellent Elementary schoolNo fireplace.Unfinished basement.My wife and I think House 1 would be better for families with teenagers (can go to basement) and House 2 would be better for families with small kids (can play in back yard).Any advice appreciated- thanks!

I would suggest that you thoroughly think through your business model. 

The problem with that model is that your family member takes 100% of the risk and could simply buy the property themselves.

This is in many ways similar to the Blackstone / Carlyle model but applied on a single market (where they are not present).

And what would possess you to relay a statement I made to you to the tenant? 

Upon taking possession I served the tenant their 30 day notice because their lease was up.