Most are going to want to lend on the rehab as it ensures the rehab to be completed,There are numerous ways to pencil it out in your favor though.It benefits to work with an experienced broker who can guide you through the process and put you into the best possible product and solution out there for you.

Don't wait for problems to happen before developing a solution.

It worked out beautifully... they met their deadlines and profit goals and had the break they needed.Perhaps selling one property sooner is the solution?

I'm not sure how they paid so that may or may not be a solution here...The other thing is technically your tenant owes you still, and the prior LL may be liable for fraud.

Before throwing in the towel, exhaust every possible solution.

Also be open to knowing that you are acquiring a series of problems.You're in the solution business. 

However, appreciation will put more dollars in your pocket over the long run.The best solution is to find a property with positive cash flow in an appreciating market.

Changing PMs is probably not the solution to your problem, and will likely create other problems. 

Maybe some AI pro can provide a solution?  

Every market in residential zoning has an expiration date, we just don't know what it is yet.The obvious solution is to buy in already regulated areas with tourist/commercial zoning.The returns are lower, but at least they can't go to zero overnight.