But if I decide to pay an extra $2,000 per month, in addition to my (dropping month after month) minimum interest-only payment, when the loan is recast to principal and interest, the new payment will be based on the remaining balance ($396,000) spread over 25 years.

Framing your position as fair such as explaining the difficulty of finding renters during off-peak months - might help maintain a positive relationship and reduce risks of property damage.Prepare for What’s NextEven if the tenant moves out early, ensure you’re protected.

Additionally, most servicers will provide the tax documents needed at end of year (1099-INT, 1098-INT) and can also issue notices of NSF, late payments and support delinquency /default.

I checked the Better Business Bureau for complaints, I checked the NJ State Attorney General consumer division to ensure he was licensed, I checked every reference he gave by visiting sites and speaking with the homeowners. 

Make sure the estimates are very detailed (scope, SF, $/sf, schedule, etc) to ensure that there is a clear dilation between contract work and change orders.

I have about $100k in capital reserves and can leverage the 2 properties for additional capital, as needed.

A low LTV refi to get you some additional cash should be enough to clear this up.

One thing to be careful with though is that if you go the personal loan route, you need to ensure your DTI is still fine and you will still qualify for your VA loan assumption AND the second mortgage.

Give her 30 days notice now, keep her security deposit, and send her a additional bill for damages to the unit in lieu of taking her to court for the damages.  

It ensures the community is full of active LP investors, not just anyone.