I recently had water damage due to an old dishwasher.

I'm going to bump this cause I really wanna know what people might say :) 

I know too nice learning that cause now at time of court I never got her new address or current employer so without that I can't enforce the judgement and she also left the unit a complete mess.

Evictions can take a while, and damage needs to be fixed, and then some kind of marketing for a new tenant  I recommend three months reserves for every property  I recommend that you be licensed so that you can show the property in case it interferes with your realtor laws in Oklahoma  I also recommend that you have some kind of a collection company that takes the payment directly from the tenant buyer to the mortgage company not to the seller  If you do have reserves, and the tenant buyer wants to buy the property, I use a reverse assignment technique that basically create your equity in the contract in the form of a note, attached to the property, and instead of two closings you have one closing, a new contract from the seller to the tenant buyer, but you get paid when the house closes and pays off your noteI love Oklahoma City because it has great  Yeilds between what you get from rent and what your mortgage payment is PITI

Depends on the extent of damage.  

One that will open walls to see how far damage might be not just the exposed sill plates but the studs and sheathings behind, below or above fixed walls, floors and ceilings. 

I would also include the inspection (that's huge to make sure they know you're serious about no damage to the property, beyond normal wear and tear).I put together a high level checklist on how to manage your property.

I'll take option 1 and here is why:I like stability- option 2 is relocating and there is no guarantee they will like the area, new job, or whatever reason is causing the move.

Grad students are probably more mature and less likely to through huge parties or do damage to the property. 

I ran some numbers myself and although your repair and maintenance estimates are a bit low - I doubled them in my calcs - I also added the vacancy rate of 7% cause I always like be more conservative in my calculations - further more , to be sure its a good deal , you really should add the management fee cause otherwise you are making calculations based on you always managing the place yourself - ( which you may plan to do anyway ) however - I like to calculate what the cash flow would be if you had to walk away from the day to day operations and bring in manager   -  That being said - It looks like you are looking at roughly 934/ Mo in cashflow or $11,220 a year yielding you about 15.6% Cash on Cash return the fist year  - not a bad deal at all.