I’m going check out the property this week to make a decision.  

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Purchase price: $140K% Down: 25% (I am considering pitching the investment to a friend and making this a cash purchase - any advice regarding this decision is much appreciated!)

I did compensate some with a free month and a lock to replace the cut one but that was a business decision to prevent negative word of mouth.  

However, I'm in no place to lend legal advice or tax advice but the points I put up are just some things I've been researching so that I am better prepared to make a smart decision.

Currently, when I include both refinance and sale proceeds, I get an unrealistic XIRR of 49%, while the average cash flow throughout the investment (7-year hold period) sat around 8%, and this seems incorrect to me. 

Your ear hurts and your eyes are swelling so you need to think and make a decisive decision.

I would make sure you know what that $ is at the moment and the potential DOM risk before making the decision to keep it vacant chasing a price you can't get. 

You'll need to make decisions, and do a lot of research to minimize mistakes for out of state investing.

As much of the other misinformation being disseminated, it's leading to ill-informed decisions by investors.