All we were responsible for was tax and insurance, which is about $100 per month combined, so we were looking at a net income of $400 per month.

It is now producing a $900/month cashflow as a medium term insurance rental.

Will having body shop next door affect house insurance premium?

: Lower Your Small Business Taxes and Tax Savvy for Small Business: A Complete Tax Strategy Guide Twentieth Editionlegal and insurance - Every Landlord's Property Protection Guide: 10 Ways to Cut Your Risk Now (book w/ CD-Rom) and supplement with Every Landlord's Legal Guide (generally speaking Nolo has a good collection of books)property management - an excellent resource is The Book on Managing Rental Properties: A Proven System for Finding, Screening, and Managing Tenants With Fewer Headaches and Maximum Profitentity start and maintenace - Garrett Sutton's Start Your Own Corporation: Why the Rich Own Their Own Companies and Everyone Else Works for Them (Rich Dad Advisors)  and Run Your Own Corporation: How to Legally Operate and Properly Maintain Your Company Into the FutureAnd here is a set of questions to help you judge if you maintain your corporate well:How well have you separated yourself from your business?

Then look more deeply into rental rates for each, how taxes, hoa's and insurance differ etc. to get a better understanding of where your dollars can go the furtherest. 

@Robert BiggerstaffI would only pay people for tasks that they are licensed and insured to perform.

I suggest you add “keep liability separate” and “minimize liability” when possible-insurance, separation, and anonymity. 

Her current mortgage payment is $1,250/mo, and I've estimated other rental expenses (HOA, maintenance, CAPEX, management fees, insurance) at $600/mo. 

Looking for a real estate investor-friendly and responsive insurance agent. 

Finally, I'll speak to licensing and insurance.