However, when it comes  to all the red-tape involved with retirement accounts, better safe than sorry is the best motto.So the moral of the story is to ensure that you don't eat up 90% of your IRA funds on a down payment and closing costs.

By the way - I also find it morally disturbing - to ask an owner to leave.

The moral of the story get structured first for tax reasons too.

Many ignore the issue and have no intention of operating morally and ethically.

I want to do things, morally, ethically, and legally right.  

Moral of the story-- I vote buy the investment property.

I want to know what should my next step be in this predicament? 

You are in violation of at least half a dozend rules plus there are moral and ethical issues.

Does anyone have any morality feelings about gentrification that interfere with an ideal purchase?

This evil bastard has a faulty moral compass and has decided to steal from the "rich" (you) and give to the "poor" (himself) by squatting on the premises under the guise of a non-existent or forged lease.Where I in your position, I'd find a FLAT RATE eviction attorney that has experience with these kinds of cases as soon as humanly possible.