B) She is still in the process of saving up, and on the off chance she doesn't save up enough by the time she decides to move out, how do i handle those funds?

The seller is highly motivated but doesn't have a lot of equity and is looking to do a short sale with the bank, but is not currently listed on the MLS as such.

An LLC or LP will give you better liability protection, but also will require an $800/year fee to CA versus a GP will not, but doesn't cover your liability as much. 

FHA doesn't finance if it has been moved, CONV you can sometimes get by if it has only been moved once, and any more than 1 and I've only been able to get VA financing.USDA only finances MFH in WA state if they are 2006 or newer.Looks like a nice purchase, good luck with the flip!

He told me no and he refuses to do it and that I had an attitude with him so he doesn't have to do anything.

As for the interior walls, I would run wire-mold just so the project doesn't get too crazy.

If that doesn't work, Google their name and the city/town that they live in.

The issue is the property was FSBO and the seller doesn't seem to have any idea what to do next. 

What happens when the 5 years is up, and the Tenant can't get financing because the property doesn't appraise? 

. :)  Doesn't seem that much... for 2 months and 6 days track record...