Do we have to show proof to the buyer that he has settled the capital gains tax and/or provide the IRS certificate? 

It has a tenant facing portal where tenants can pay their rent, which the app deposits into our account the next business day (even though ACH payments do not regularly settle for 4 days!).  

The lawyer just needs to make it expensive for you to defend yourself so that it's cheaper for you to settle than take it to trial.Yes, you need good insurance. 

Im hoping everything is settled by end of June, I believe that is when everyone moves around to be in their new homes by July1st.

Even if your mortgage is 8% and you earn 6%, the tax-effected 8% becomes a 6% (assuming you can deduct it, again, I get it, but...).Once things feel good and you are settled, then you knock off that loan with your pile of cash.

As they've gotten settled the experience has become a nightmare. 

If they don't pay the balance it will follow them if you report it/ send it to collections and it will stay on their record until the settle it, no other landlord wants to see that, or an eviction!

Their explanation had to do with the front porch settling and causing water to get into the basement.

Perhaps this would make the lender more comfortable while giving you the benefit of settling with a shovel ready lot. 

I agree with John about settling on a property and running the numbers.However, if it were me once the market and property were identified I would form an LLC with an operating agreement that states what each members contribution and responsibilities are.