We plan to do a cash out refinance and keep this as a long term hold.

First, I'd try to find why the water is doing that as you can replace the siding, but if the water is going to keep doing it, you will have that problem again.If it is isn't a condo, I'd talk to your insurance company.

The other is demonstrating efforts to meet that intent.Between now and the pending closure I would actively look for work in your area and keep emails and letters to show that you did that in case it comes up.

However one thing that would make trouble for me was that I had some pretty high standards I was keeping the tenants to in an effort to clean the buildings.

Otherwise you run the risk of keeping yourself busy going nowhere.BTW, I'm in California as well and invest exclusively in Detroit.

So that was my plan - to kind of recycle those cc funds and keep my cash out of my investments.

To add, I will refund her her prorated rent, however can I keep her 500 desposit until the cat comes home for vet bills?

MANY people have wishful thinking and do not correct whatever is keeping them from getting a mortgage. 

Most of the time, markets are cheap for a reason - keep that in mind. 

Complete repairs, find new tenants and keep the property.