My experience with other EU countries (though not Italy specifically) is that unscrupulous tenants can take advantage of landlords for years of court battles, but the tenant's debt to the landlord continues to accrue, while the debt cannot be discharged and is taken seriously by the legal system.  

If it is indeed in arrears by $550, find out if that includes a carry over for unpaid bills accrued by the previous tenant.

Interest could be paid monthly or accrued and paid when you refinance it. 

"I, Bob Smith, promise to pay Jim Jacobs a balance of $XXX,XXX  which accrues Y% interest per annum compounded monthly, in equal monthly payments of $ZZZ over the next 20 years, etc". 

Buying a primary residence doesn't make sense in every market.The goal should be to pay off that interest accruing student debt as fast as you can.

Keep on doing it; it's a great way to get things rolling, pay down some debt, accrue some capital, and a few rentals along the way.It's one of several good ways to be an effective investor.

I’ve never heard of taking a tenant who is still in your property and continuing to accrue debt to small claims court. 

What investment vehicles have you had success with to hold onto your cash reserves while accruing interest and maintaining liquidity?

Currently I rent with a roommate because I wanted to scale back on finances in order to accrue wealth to purchase a first home, then this happened.

I copied this from the Yavapai county auction website:Refundable and non-refundable feesThe advertised certificate amount consists of delinquent real estate taxes, accrued interest and penalties, a $10.00 certificate fee, a $10.00 taxpayer information fund fee, and an internet sale fee.