That being said any property I purchase with the explicit purpose of owning as an investment, is purchased in one of my LLC's and treated as an investment and a business day one.Hopefully that helps better understand my personal thought process for why I structure my things the way I do. 

I'll come back, unharmed, and armed with new knowledge.

Get ARMED with information and under no circumstances, get into an argument or verbal-shouting match (I know it's tempting) with them as they can become emotional and you have to walk a very DELICATE line when dealing with problem tenants like this.I'm NOT providing legal advice: but if you have a lease (contract law) and they are in default, it doesn't take a genius to decipher who is in the wrong.

I'll follow up with them and see where they stack up, armed with this info.

Don't assume you can charge a tenant late fees without explicit definitions of how and when these charges apply. 

I'd spend your time and energy on an arm's length deal.

Search "ira non recourse loan" and you will find several.You can use 1031 Exchanges with properties held in the IRA.You can put properties in a LLC within in your IRA for protection.You do not hold title directly; a custodial service holds title for you.The custodian will be the entity signing the closing documents.All actions must be at arms length.

It is not 100% clear to me from your description on how you wish to structure this transaction but remember, if you IRA is involved, all of its transactions must be 'arms length', which means no personal benefits to you and you are not allowed to provided any services.  

My lease would explicitly forbid you finding a new roommate - - that's called Subletting and many leases would do likewise.I hope you're not in violation, as both of you could be evicted for cause.

I'm also considering direct mail marketing to people that have ARMS that are about to adjust.