I'll agree with the other MA landlords that pretty much think you should return the deposit no matter what condition the place is in or how much rent she actually stiffs you.You did NOT handle the deposit even close to right so she would probably win and get treble damages from you.First issue is that you must have a separate account for each deposit.  

I am 36 now, but when I was your age I was deeply in debt, had awful credit and had no sense of how to handle my finances.  

An experienced house hacker in a 4-plex who is also accounting savvy might give you a pretty good answer, but a CPA who handles lots of RE clients would be best.For FHA loans I think the PMI does not go away, but I could be wrong - most likely you will need to refinance at some point to get out of PMI.  

My partner and I used to handle all website/tech items - but now so busy we "sub" a lot of the work out.

I'd say to contact the inspector(s) you've got good relationships with and not knowing the whole situation this is one you'd have to decide exactly how to handle it, but maybe its setting up a meeting with one of the supervisors or just talking on the phone, but with the goal of getting the point across that you want to spread the word throughout their office (and admittedly, its a large city with a lot of inspectors, we're not just talking about like 5 people here) but to get the point across that you are in this for the long term, you will be keeping your properties in great shape, etc because like I said before, from the DNS point of view and especially being from out of town (and double that for being from Chicago, which for whatever reason, SOME Milwaukee people think of as being something bad) for all they know, you could be the latest out of town slumlord and you need to smash that perception into a million pieces and that may well be something you'll have to do many times over, but its not that hard to do.

KNOW what you are getting into, the process, the numbers, who is doing what, how money will be handled, etc., and GET EVERYTHING IN WRITING.G.

Since owning for over 25 years,  operation procedures are in place for management that requires little of my time as all aspects are handled by management.

I closed an out of state wholesale deal and paid a local partner from the profits to handle everything.

My dad came and put . 1 little slab of mud on the wall and said his body couldn't handle it.

In Delaware County, where I am from, there is one "go to" attorney who really knows how to handle these matters.