If you only lend up to 65% LTV, I believe you are protected.

I know that she will lose her deposit but what other things can I do to protect my investment without being an *** of a landlord?  

Hopefully things go smoothly, and I promise the more effort you put into clear and concise communication in the beginning, the less chance tenant will get upset as a result of unexpected outcomes (like starting an eviction process, if only because you have to protect yourself).Source - years working in real estate.

@Robert D.In addition to @Chris Seveney's extensive explanation, if the property is located in Chicago or just Illinois you've got this to deal with:https://www.domu.com/blog/new-illinois-law-protect...Your assumption is that it will sell at the judicial sale for 40k.

Can you put some sort of contingency on the offer to protect yourself?

Best of all, my HELOC is liquid and it gives me asset protection through debt.Best,Dave

We're also each getting umbrella policies for protection.

Thanks @Steven Hamilton II,  I guess I have been seeing your pick up business from the other side.TT offers the audit protection you pick up for $60 to the TT user.  

But, talk to a bankruptcy attorney immediately to protect your interests.

GOVMIT is protecting distressed homeowners from wholesalers and others who wish to strip their equity.Prior to those dates it was Caveat Emptor and legal to contact and buy from them and make as much spread as the deal would provide.