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

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

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.

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.

There are quite a number of things that can make utilizing an FHA loan more difficult such as more barriers during appraisal, appearance of low qualification/little cash, typically longer closing period, likely higher interest rate, and PMI cannot be dropped without a refinance if 3.5% down.That said, just chain 5% down conventional loans, and make sure your duplexes pay for themselves.  

It'll take time but can really pay off if you stick with it.I'm in Los Angeles and I've investing in TN and GA in the past, and currently investing in SE Wisconsin (your area).Let's connect and discuss the market.

I do not understand your remark as related to the DSCR loan.  2 ADUs are not allowed by f/f conventional financing but is not always enforced.Fortunately if you stay with the current tenant without a refi, by the time you pay principle it is likely the rent will have increased enough to absorb the increase mortgage payment.