If they drop another 20% you will loose your equity but the bank will get paid.  

Are you in a tight or loose rental market?

I have not yet to close my first deal but I'm bound and determined to do so before the new year.

However, it is entirely your decision, since she is still bound by the same original terms.

I was in contact with them all day yesterday and the clients representative also confirmed with me that she was out of bounds and should be leaving.

In a report, it came that couple of roof tiles were loose and they told us to fix that.

It was urgent and some issues needed to be addressed.I called him (very personable, relaxed, talkative) and he assured me that it was personal problems with his father in law and feels that they are overstepping their bounds as property managers. ( He stated they may be coming in and looking around when they were not home, but no proof) I did reassure him that they just cant come in (other than family capacity) any time they wanted.

I know others who buy in nice parts of Jersey city and actually loose money every month but hope that in 5 years they will be able to sell at a huge premium. 1.

That would be 3300 per year we would loose out on with the section 8 tenants. 

If this is a long term rental, I would likely remove the loose tile, mortar the hole level, and throw a rug over it until the tenant moves or goes on vacation, and then gut the bath and renovate.