I'm not sure what your legal or moral obligations are in this instance but it may be worth considering given that you know how it feels to be blindsided by this issue.

Also, if you want to do a cash-out refi, keep in mind that most banks will require a 6-month seasoning period before you can cash-out, but based on your numbers, you may only qualify for a rate/term refi because the typical highest cashout amount is 75% LTV, but of course, there are instances of 70%, 80%, etc.

For instance, there are also transactional and holding costs - especially when hard money is used.  

I have heard instances where judges have still ruled in favor of the person suing the investor even with an LLC in place.

. :-)3) Put in your offers at numbers that make sense to you and to your source.For instance, I won't offer 50% of the list price on an REO thats been on the market for 2 weeks.

Unless people are always queuing up to rent in that building, perhaps best to use conservative numbers in the first instance to check if the ROI numbers stack up, and then, any improved rents obtainable over time would be icing on the cake, rather than being relied upon from the outset.

For instance, I won't offer 50% of the list price on an REO thats been on the market for 2 weeks.

However, as a buyer in either instance, I would be looking at the ARV price to make sense as my base cost for a rental.  

For instance, one of my favorite tools is a property control (not ownership) device called a land trust.

For instance, if you're just wholesaling the deal, then you will not actually have to pay any of the closing costs.