We owe $154k on the property and the interest rate is 4.25%, the monthly mortgage is $1050 with taxes and insurance.

Challenge: It's in a neighborhood (no HOA), and renting the entire property (sleeps 25 in total) caused problems in the neighborhood, due to noise and parties – so we only rent the separate cabins now.

That said there are some nuances and requirements to property implement interest tracing so ensure you talk to your tax professional ahead of time and keep the funds movement as clean as possible. 

I would say pay the taxes.  

They also have the Mortgage Tax Credit.

Having all Section 8 tenants may cause you to have a higher cap rate on your exit due to a higher headache factor surrounding Section 8.

Take ownership of your mistake and learn to do the proper due diligence recommended above😊

If the pipe is 50 years old and had a life expectancy of 30 years, they're going to argue it was due to lack of care on your part and try to deny the claim. 

Needs all new cabintry, windows, doors, roof (has some life left), fixtures, fencing, some electrical and plumbing changes, and some framing/drywall due to termite damaged sill plate in areas.

Through a wholesaler and we negotiated after doing thorough due diligence How did you finance this deal?