@Tom OchiengI would reach out to a real estate attorney for specific advice on this situation since you already have one tenant who is being difficult.On a side note, when I have inherited tenants, I have been most successful when I have provided longer non-renewal notices, like 60-90 days, and offered to assist with moving costs.

I am guessing you guys are non-accredited investors.

That means there is not really an effect on the debt to income ratio neither positive (income) or negative (loss) but rather simply making that payment  non issue. 

However, if the FHA interest rate is lower, I would still go that route and if rates drop refinance  however keep in mind FHA has PMI for life  Here you go FHA has the self sustaining requirement that requires the three non owner occupied  units to cover the entire PITI which with 3.5% or 5% down is virtually impossible with today's interest rates and price level.

My non-professional understanding is that those losses can only be used to offset income from that property.

It is also possible that either the folks in charge of the station, or the prosecutor have set a policy of not wanting to pursue non violent crimes, or even not paying attention to crimes against folks who are not local residents. 

Furthermore you can vastly increase your returns through leverage using a non-recourse loan but that will definitely trigger UBIT but again the numbers can still make a lot of sense. 

You can often get better rates with a national lender, but the customer service is non-existent, communication probably sucks, they may ask for the same documents multiple times, etc.

Cleaner took pictures of the condition she found it, then after cleaning.

You'll have more flexibility with non-traditional lenders, traditional will all follow the same Fannie/Freddie guidelines.