After the initial inspection we sent a response to the inspection asking for $21,500 in seller credits to cover the roof and furnace (both needed replaced). 

Instead of evicting them, i was thinking is there some way that I could rent it back to him for very cheap (mainly to cover just the taxes/ insurance) ie 2k a year rather than the going rate of 2k a month for similar properties.

Also note that my company will possibly either cover closing costs if we sell or provide property management for two years if we rent.

And that's where they get in trouble.I have never taken money out of our REI portfolio to cover living expenses.

Additionally, we have authored over two hundred blog posts on our website, covering a wide range of topics, many of which focus specifically on investing in Redding, CA.

Also, coming from running a business just think of RE as a business (which it is), the numbers have to work and your investments need to fit into the big picture.

Is it covered by some bonding or insurance the inspection company holds?

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.

I ran into 1) not covering RE in CA 2) not covering vehicle in CA 3) requiring all our insurance to be with the insurer providing the umbrella policy.  

FYI I do have plenty of reserves for my other units already, but would like to keep each property separate.My question is, where should I draw funds from to pay the least amount in penalties, taxes, loan interest, etc. from the following sources I have available:- 20 year 401k loan for a property- Sell a piece of my stock portfolio at 15% capital gains tax- Take a HELOC against an existing property- Private money loan from a trusted partner I have worked with beforeAlternatively, I could pool the reserves for all my properties to ensure I can cover anything immediate and know that I could always sell off a piece of my stock portfolio if needed and have the funds within 3 business days or set up a HELOC and only draw from it if needed.Appreciate any thoughts or what you have done in the past.