They can simply not approve the sale...and just because there is another better offer doesnt mean they will approve a sale to that one either.Id say unless the bank has already approved a short sale ahead of time with a strike price, it is probably a waste of time to purse one these days.  

No whiz-bang profits, but fairly steady growth.  

Assuming we break even once it sells, or make a little profit, we will be able to pay off all debts and have $60K-$90K back into savings to play with.

If there is any gain after the reverse mortgage is paid off, it is tax free up to $250,000 of profit.

If it were me, I would simply let them know in writing that any alterations must be returned to original condition at lease end or they will be held liable for damages.

I only ask because I managed a profit center for Lumber Liquidators for about 2 years and I was able to get 4 and 5 mm click vinyl for $1.59 before employee discount. 

The ARV, after repair value, minus the repairs minus “costs” ( closing cost, end buyer profit if wholesaling, holding costs etc.) minus YOUR desired profit equals your max allowable offer, MAO.

I can still sell at a profit and after rehab it cash flows very nicely. 

Try looking at:The Best Types of Markets for Profitable Turnkey PropertiesandWhat to Ask When Working With a Turnkey Provider

I would use this profit to purchase a multifamily property, that is a good deal of course.