I'm trying to purchase a note they are carrying that is about to go non-performing. 

Mark, you have every legal right to hold them to the fire of their legally binding lease agreement and suck every dollar out of them that you can and take them to court and sue them for specific performance + legal fees if you desire to do so.

If I am afraid, how will I perform in this environment?

Costar sees signs of multifamily trouble: Multifamily cap rates risingLooks like investors finally starting to demand real cap rates and multifamily will begin trading on present performance and not future rents. 

Once you determine your "why" you need to perform due diligence when determining what market(s) you want to invest in: >is there sustained demand (for the long term) >assess the comps, i.e. what are other similar properties selling and renting for in the area, determine if the guarantees are accurate >vet your developer, look at their track record>know the underlying risks>establish your team >know your exit strategy: look for long guaranteed income periods & high yields These are just some of the factors you should be considering before jumping in. 

Engaged in any activity (definition):You are ineligible for unemployment insurance on any day in which you perform any services in employment or self-employment regardless of whether you are paid for these services.In my tax return I report the income in Schedule E, I don't have a corporation.

I read through the Fannie Mae guidelines released on March 23rd and I see that they have actually relaxed some of the appraisal requirements but no where have they said to not initiate appraisals.I'm in a big problem now where I'm already in a contact, underwritten loan, appraiser is ready to perform appraisal but lender doesn't want to initiate appraisal.Should I be taking a legal route here?

Currently self-managing the property and my question is.....how often are you (or your property mgrs.) checking up, inspecting, performing maintenance on the property?

I have 2 properties I'm thinking about either selling, keeping or doing a 1031 into a better performing property.

Their stock has performed very well, relatively speaking, throughout the downturn.