minimizing free cash flow with larger mortgages or shorter term mortgages takes the cash flow which would be taxed and puts it into the amortization of the loan. 

Combining these two minimizes the impact of financing on your Net revenue. 

What steps would you recommend to minimize damages and resolve this issue efficiently?

I ran the numbers on the deal knowing that I would break even on cash flow in the first year with minimal rent increases but significant cash flow in year 6 when the 401k loan is paid off.

Sounds like you got a property with minimal out of pocket.You could try posting the room on FB or Craigslist.

Figuring the seller was milking the property and doing minimal upkeep, the inspection team report has so far already helped me bring the seller down several 100K in asking price.

Age: I think it will but you can minimize it by being knowledgeable, professional, confident, and fair.  

Also, I'm stuck with out-of-state investing which brings a whole series of risks with minimized financial upside (in my opinion) 

Affordable markets in growth regions, like the Midwest or Southeast, provide excellent opportunities for ROI while minimizing upfront investment.

Would love to hear more about your thoughts on the refinancing options you’re considering or if you’re looking at any other ways to structure the financing to minimize those risks.