So for example agent can overprice bank owned property and it may seat on the market for months, while they reduce price by a few thousands every couple of months, till it will even start register on peoples radars.  

If they purchase, the option fee amount paid will be reduced from the purchase price to lower the purchase price on the sales agreement, after they exercise their option to purchase.* The property is not sold and title is not transferred until the tenant exercises the option to buy.

We only have your side of the story and don't know any of the details.It sounds like by complaining, you may have shot yourself in the foot, so to speak.A handicap, reduced mental capacity or any other disability does not exempt you from the property being deemed uninhabitable, actually it makes matters worse. 

(simply elect to not renew with a notice period you specify)2) collect rent on a more regular basis...I find that a lot of folks have difficulty budgeting for an entire month, so I collect rent via direct deposit every two weeks...3) as a last resort to avoid costly turnover, reduce rent to a figure that she can meet that still alows you to cover expenses...once she demonstrates ability to say...pay $950 for two months, raise rent to $1,000 a month for a couple months...then go back to full rent...It would also make sense to verify if she has had a change in financial circumstances and can no longer afford the rent...if that's the case, it doesn't matter what you do...she will continue to fall further behind on payments

The combination of large mortgage payment and reduced rental income typically results in neutral or negative Cash Flow for the first year you own the property.  

Then create an LLC or S Corp as a "Land Acquisition company".I am buying this land basically as a way to reduce my taxes because then I would be able to write off stuff that I normally wouldn't be able to write off.Thoughts? 

If they purchase, the option fee amount paid will be reduced from the purchase price to lower the purchase price on the sales agreement, after they exercise their option to purchase.* The property is not sold and title is not transferred until the tenant exercises the option to buy.

Passive activity loss rules prevent investors from using losses incurred from income-producing activities in which they are not materially involved.Being materially involved with earned or ordinary income-producing activities means the income is active income and may not be reduced by passive losses.

You will significantly reduce the size of your buyer pool if you don't.  

If they purchase, the option fee amount paid will be reduced from the purchase price to lower the purchase price on the sales agreement, after they exercise their option to purchase.* The property is not sold and title is not transferred until the tenant exercises the option to buy.