That is a big step that very few get too.As far as financing, its hard to say if it was good or bad.

The carpet was brand new and now it is very bad. 

Even with AMT it may not be a bad idea as to limit tax rates to the AMT Rates.

The principal for the property currently sits at about $86,820, with an Escrow balance of about $850.This is obviously a very bad deal as it is; my question is what would be the best option to drop the mortgage every month in order to get a positive cash flow, either by refinancing the mortgage, or getting some other loan at a much lower monthly cost?

The Thanksgiving Holiday and some bad communication played into it. 

Working on a couple others.About 3-4 years ago, one of my neighbors who knew we rented bought their own townhouse to rent.In the past year, my father-in-law bought two different rental properties.My MIL (they are divorced) and her husband are looking to buy a rental property now.My neighbor in the last week mentioned they are now buying a condo to rent.When this many people in your circle of acquaintances jump into being landlords, is this a good sign or bad?

But it doens’t sound like she believes they are accurate.I had read that some realtors will throw bad deals at you to see if you are educated enough to know they are bad and/or to see how serious you are about buying.

It isn't bad or good, it all depends on a persons goals and level of involvement, or lack of involvement, that they want. 

That's the bad news.

It's not in too bad shape, but was a smoker's house and hasn't had any cleaning done in years.Based on a quick walk-through I'm looking at internal painting, minimal external painting, carpet replaced (or removed to get to the hardwood floors where possible), a bunch of minor repairs to things like gutters/eaves/etc.In a perfect world, this relationship would continue to care for the property as issues occur in the future.