If the out going tenant puts multiple holes into the walls and therefore makes the property un-rent-able  until the holes are fixed, is the out going tenant responsible for the loss in rent income ( 1 month) and can i...

We paid much more on what was owed on the second lien and the question is why the excess proceeds is not going toward paying the senior mortgage?

Usually the fines are for "Noxious Odors in common areas" or for excessive noise.  

Personally, I am planning a strategy of only repairing areas where the peeling is excessive i.e. the guest bathroom and guest bedroom.

IF for security that generally covers excessive damage.

They use the cash flow from each property to pay for itself then the excess is used to pay themselves. 

If you used the FMV at the time of conversion to rental use to determine your depreciation, then you will also have excess depreciation to deal with which will be taxed as ordinary income.  

It would be easier and cleaner to just open a new IRA account with Schwab (or similar) and transfer excess funds/cash flow from your SDIRA custodian to the new IRA.  

Option 1: Do I take all of my excess cash flow (which I don't need) and pay down the debt as fast as possible - with the intention of refinancing, using the proceeds to purchase other income properties.Option 2: Save all of my cash flow to combine with my other savings to fund another down payment and just do this as quickly as possible (while still keeping a reserve for disaster etc..) 

Cash flow in excess of $200 per door and on track for a return in the neighborhood of ~10%.