or Do you think its too much of a hassle and not enough profit margins for a property to give net positive gains and possible house appreciation?

And without cash flow lending options also become limited. 

I'd also restate to them that you are not going to involve yourself directly since that is their role, but that from her email it sounds like allowing her to early terminate with no penalty IF it is returned in good condition may be the best option.

I would go to an insurance broker and see what options they have.

I just saw the part about FHA not being an option. 

(I told him we have other options, but I would rather that he gets to make the profit instead of the bank.)

But I began this reply with IF, because if they are all cash-flow positive, I would personally not seek to pay any of them off early (depending on your age), and instead save that money to put towards obtaining additional properties.

You will then have a few options with that rent money....you can put it into principal or you can start saving it to purchase yet another property.

And as we've been negotiating, the more drawn it has become the more we're realizing a lot of the would-be buyers are getting in more vulnerable positions.

Are there any other books or resources you recommend for someone in my position?