Hi @Sandy Salazar, what a great predicament to be in.

It turned into more of a morality decision to part ways.

They will be best equipped to help you figure out how to minimize taxes in this predicament. 

Fore me there has to be some moral hazard when hiring PM.

@Bjorn Ahlblad I agree with you wholeheartedly.Our approach for such tenants is to offer to give them back their deposit in full if they will leave 30 days.We don't put up with it.Usually, the tenant settles down and becomes a model tenant if not we lose a bad tenant.Either way, we win.The moral of the story: Do not let the tenant intimidate you.

You have a bad cop get rid of him, you cut your police force and reduce morale by constantly attacking their character and you get a massive reduction in enforcement. 

My morals won't let me falsify residency just to have a 3.5% down payment on an FHA loan, but that's the only feasible deposit amount that I'd be able to swing at this point in my life.

Currently in a predicament and not sure how to approach it. 

Quote from @Mario Morales: I just got a multi-unit and it just so happens that it requires a bit more cash, such as plumbing, electrical etc,.

Moral of the story until you close attorney review/contingencies the deal is not really forsure yours.