What should I be aware of?

@Matthew Hamilton, just to clarify, are you saying that your lender is not aware of the one-year owner occupancy requirement for FHA loans?

@Cliff Tsang, make sure your benefactor/s are aware of any resulting IRS obligations on THEM!

I'm aware that a pre-qual lasts ~90 days  I'd like to get as many leads and options as possible, however, my concern is that I don't want to have my credit dinged multiple times.  

If you decide to pursue out of state, please hit me up as I do want you to be aware of the pitfalls out there.

@Matt Rath, if you already owe 80% of its appraised value, I'm not aware of any Lender who will/should give you an additional HELOC.

Be aware that doing might also set the new sale price (e.g., if you set the price at $30k and it reverts back to you then you will be the owner of record for the asset at $30k).

This is all the most pessimistic possible view, but be aware that leverage and debt have risks.

I am also aware of Fannie Mae and Freddie Mac loans which have favorable terms including being non recourse but according to my mortgage broker these wouldn't really work in this situation.

It does seem like they have it in for your tenant - is your tenant aware of the problems they have caused or are these accusations baseless?