The nice thing is you have the housing authority to back you up when they don’t pay their portion or there are issues with noise or messiness.

This is because once there is a 2nd lien heloc, they will need to subordinate to a refinance of the 1st lien, and sometimes that can be a messy experience, depending on the heloc lender and their guidelines.Obviously the cost of refinancing matters too.

We knew the house would be messy but were not prepared for the extent of the damage. 

The tenant broke the lease and moved out and left a messI sent the message that the secutity deposit is not enough to cover the expenses after the tenant moved out to the last known address of the tenant (which is my rental house)A friend went to get the mail and its sitting there in the mail box.So, the tenant has not left any forwarding addresses and has not forwarded the mail.What should my friend do with that mail?

This is why people don't like renting to friends/family because its human nature to mix emotion into the decision making and that makes dealing with managing the investment messy when things go sideways.

But IRS does not pay on improvements when they redeem - that could make it messy for rehabbing if the redemption gets drawn out. 

Messy, but usually effective.So, I would consider the possible outcomes and the probability of each and do the math to come up with an expected value for the cost of the repair.

My good friend went through a messy divorce which hit him hard financially.

Bills like this are difficult for tenants to budget and create messy scenarios when someone moves in/out around the timeframe of the bill coming out. 

Tenants are often messy and the house doesn't show as well. 2.