I don't have answers to the questions really, but the one big problem I can see is that you will more than likely be paying most of your rental income out in tax, due to the fact there is no mortgage against the property and you will be unable to write off any repayment interest against tax. You will be able to write off other costs of course, but you'll more than likely end up paying a good chunk out in tax.
Other, more knowledgeable contributors can help you with the other questions, that's my 2 cents!