Like Charlie and Mark were mentioning, you want to tie up a property quickly, but the more complicated your offer is the less appealing it may be.    

I am working with her nephew and he mentioned that he believes there is a reverse mortgage on the property.What is the next step for me?

I've tried to mention the most common things, but you have to talk to a local person with knowledge of procedures and traditons in the county you chose to "chase fireflies" in.

And what you mentioned is common in Chicago. 

Thank you Allan, I will make sure to get started with the things you have mentioned and will make sure to keep asking questions here.

You need to look at it like the business it is and maximize your profits.You mentioned at the end wanting to, “at least get the tenant to cover half your house payments.”

They then take those notes and package them with others from similar purchases and sell them along with their analysis to private investment funds.This leaves 45 notes from a package of 1,000 that three professional investment funds, doing intensive analysis by highly trained MBAs, have determined cannot yield even a minimal investment return.These are then offered to the individual investor, who according to those in the industry “with something to sell” (the leftover NPNs and/or “training”) can profit enormously by (1) making them re-performing notes or (2) foreclosing and selling the property for large profits.The pitch from those “with something to sell” is twofold: (1) “There is plenty of meat left on the bone” (actual quote), and (2) if you send the borrower a complete package of all docs, weighing, say, five pounds you will “shock and awe” him into paying on the note.I highly doubt either of these claims have even a micron of validity.The parties with a financial interest in you buying into this will cite isolated instances of great success, never mentioning the all-more-frequent instances of total failure.So at the end of the day the training promoters have collected up to $30,000 per person for their NPN “mentoring”/”coaching” program, the retail asset disposer has made 50% to 100% profit on their inventory, private middlemen have turned a $2,500 investment in a note into $16,000, and my sister-in-law who purchased 5 NPNs over three years ago and has spent large amounts on attorneys, taxes, and brokers has yet to see a penny in return.To paraphrase, if you don’t know who the sucker is in any ultra-high profit promise situation, it’s you.

As others have mentioned the city might stop you from executing a plan that sounds like a killer value add. 

Thank you for the mention, @Alan Rohrer.I agree that being local is not required for an accountant, but is essential for an attorney. 

The amount you took in depreciation will most likely be taxed at 25%.Finally, you mentioned rolling money into another home- I'd look up "1031 Exchanges" on this forum, because if you plan on rolling money from deal to deal, it may help you defer the capital gains taxes in the future.