Property management is a business to build that needs a large scale properties in order to brek even, and after that, start collecting the revenue.In your case, seems you are almost in break even point:  lets see:1) you have now a hand man that will cover the repair cost in many of the units2) you have a group that could collect application fees3) the same group would potentially reduce brokerage cost (depending on the state of the properties) advertising themselves4) You can expand this business and make it profitable...  

But now, the Buyers want to renegotiate a lower purchase price significantly reducing the offer price by more than 20% of the contract price, resulting $1 million+ less from the agreed contract price!

I figured you'd get some value out of the punch list I've made below on how to reduce risk when investing out of state.Don't buy in the roughest neighborhood in the urban core.

Having recently closed on my first property (a 5-unit, four of which I'm renting and one of which I'm occupying) means both drastically reducing my cost of living at a time of economic uncertainty (the rent from the four rental units covers debt service and operating expenses) as well as projects to dive into while work (and so much else) is slow.Long road ahead to get to where I want to, but I consider myself very, very fortunate to have started when I did.

Prepayment penalties may be applicable, but some lenders reduce the penalty fee as time goes on.3) Risk of default on all properties.

This could be reduced payments for a time, reduced interest rate, skipped payments (extending the amortization) or any other agreement that works for both of you. 

We are thinking of either A) letting them know we will be taking the necessary precautions to be safe and reduce exposure during a showing, or B) seeing if they can record a video tour, but it seems unlikely we'd rent it to someone sight unseen. 

The comfort it would provide my family while reducing our housing expenses.How did you find this deal and how did you negotiate it?

This also will help your current tenant feel safer since it will significantly reduce the number of tire kickers.

With this you may not cash flow, but you may be reducing your living expenses by having your mortgage more covered than you would!