He knows the loan will pay and they won't default because he knows they're solid. 

Then there you go.One thing I am looking to try to do but haven't done yet is buy something with zero down on seller finance, put the rehab on a 0% credit card, then refi the seller off in 12 months and pay back the card. 

Tenant stopped paying rent before 2 months of the lease expiring, property manager filed for eviction process but tenant vacated the property before sheriff served the notice.

We are paying cash to him every week or so when he sends bill. 

Do you have to pay a bit of a premium for that luxury? 

@Bonnie Low - it's important to know what services you're paying for.

Regarding your other questions:  - If the going value is $260/SF, why would you pay more than that?  

I would focus on the house hack and not take a pay cut.

It's pretty common practice to have something like that in a property management agreement, and if it falls under that limit they're going to pay it and not notify the owner except in regular monthly updates because it is below the threshold of what is an ordinary expense in the course of business.

Use that loan to pay the back taxes and get things under control.