They also have a 14 day old baby and don't want to move him.I don't know what to do and I keep stressing for her and her family to leave the property.

If it's locked in on a 30 year note, I wouldn't stress out too much about that rate.

Either way, it reduces the supply of rental housing, which makes it harder for people to find housing.

Any tips for negotiating with a bank to help reduce the price to purchase based on repairs?

Piece meal contractors and pay less but have more work OR $102k for a one stop shop and have less stress but have way to much invested.  

Both of these are extremes in the spectrum.While it may seem logical that we can raise rates due to “inflation”, that same inflation is affecting the average consumer’s spending power, which could have a significant impact on whether (s)he takes a vacation, which will reduce overall demand for anything travel-related, including vacation rentals.

People will negotiate with you or you can reduce it if you don’t get traction on applications.

Should I reduce the offer price and not collect monthly rent but ask that they pay utilities and other stuff like cable, etc?  

To mitigate that, let's reduce the down payment to 25% (or $27,250).

Now I know that the county doesn't care about that, but is there anything I can do to get this reduced or at least an agreement to increase it less for the next few years until it gets to market rate (for lack of a better term)?