Furthermore, there is no legwork involved.

That number seems to cover any unforeseen expenses and still walk away with a good risk/reward.

We have no water and the roads are seriously flooded and the roads out of town are closed or cross at heavy risk.

I would never want to treat an investor as less than absolute gold and risk losing access to capital.  

Are you looking for something more passive or do you want to be more involved/hands on.  

However, this new buyer is threatening to get attorneys involved because he seems to think that this is not a encroachment granted in perpetuity.I think my folks are in the clear on this due to the nature of the language in the agreement but the last thing I want to have happen is get lawyers involved and have them have to pay to move the tank since, technically speaking, they are in the wrong.Don't have any experience/advice in this matter?

Though, it is a major headache and risk for not a ton of money, relatively speaking.

There were a LOT of hours the owner paid for that were spent doing the paperwork and background work involved.

NE Ohio has had a tornado and a couple of fires over the last 50 years, so not sure there is much of a risk.

 $1900 or $2000 /month would be much more likely  based on other rentals in the neighborhood.Option 1 seems like the lower risk option and the way we are leaning if we keep the property.