I was always told that you never touch retirement accounts unless unusual circumstances.

This probably makes all the difference.9months delinquent and going to sale in 30 days sounds unusual to me.   

There is nothing unusual about that, except your PM should have adequately screened the Tenant and discovered what is a big red flag.

I have literally returned every requested document same-day, and there's nothing unusual or complicated about the loan.

Not unusual for the lender to request the last 3 month's bank statements and if they see large deposits, they will seek the source of them.

One small vacant period is not unusual. 

The past has shown resilience in the real estate market during economic downturns.In uncertain times, taking action can potentially lead to significant rewards.

The thing I am uncertain of will UC allow rent increases upon renovation.

I am uncertain of the legality of these actions.Could you please provide guidance on whether this is a legal course of action?

One other option we’ve thought of is looking at Mund’s Park/Flagstaff area for a 2nd home/vacation property (only 10% down), but I worry that those markets feel more unstable in comparison to Phoenix with the uncertain future market.Would love to hear some thoughts.