I typically don't comment on other's businesses unless I know from personal experience.

What to do with the equity in this property will depend on what your personal finance plan says about your asset allocation. 

The interest rate on a HELOC or Heloan may be better than the personal loan. 

For funding, explore options like FHA loans, personal savings, or creative financing, and focus on New Jersey markets that align with your goals, such as Newark for rentals or commuter towns for house hacking.

Typically someone who was communicative turns distant, unresponsive, blows you off when you're trying to talk to them in person, and the tall tale sign of boxes in the hallway.

Intangible assets like goodwill or tangible personal property (e.g., equipment) are excluded from 1031 treatment and are taxed separately—goodwill is typically taxed as a capital gain, while equipment may be subject to depreciation recapture taxed as ordinary income.To minimize taxes on the sale of the business, consider strategies such as Opportunity Zone investments, which defer gains until 2026 if proceeds are reinvested in a Qualified Opportunity Fund (QOF), or structuring the sale as an installment agreement to spread taxable income over multiple years.

Id have a lawyer on hand, this person seems like they will escalate issues once you notify them you aren't renewing their lease.  

As a beginner, I would personally get my feet wet with something a little less risky without a balloon payment like that.

Pre-foreclosure - homeowners are desperate to avoid foreclosure and they quitclaim deed the title to some XYZ organization , person, or to a lawyer that specializes in foreclosure defense.

Personally when buying rentals I tend to buy in neighborhoods that I feel like I wouldn't personally mind living in and when I look for tenants I try to look for people that not only pass my screening but also I personally don't dislike.