(Bad credit is phone bills to collection and visa often late).The exit strategy is repay the property tax and put on mortgage on an 15 year amort so it will have at roughly 75% LTV in 2 years and refinance with a MIC.My concerns are as followings:If they do not pay I will either lose roughly $20,000 assuming an exit price of $130k or own a property (it's a duplex) that would have roughly IRR of 8% on a 3 year hold in a town that I do want want to own a rental in.The borrowers have enough money to pay as things are now.

@Peter SikI'll say this and leave it at that- it was one of the best advice I received from a experienced landlord- "NO tenant is better than a BAD tenant" Pick your tenants wisely, it could make or break your investment property.

This is why the HOA has an interest in your insurance coverage.The HOA is covering the outside of the units BUT - if you are unable to rebuild the inside of the unit because you don't have the proper insurance that is bad for all the owners in the association so that's why you are getting heat about having the correct coverage.  

And is it a bad time to get in with home values through the roof? 

I ve 2 properties with them and doing very bad management.

A bad tenant could ruin all of your numbers in the sheet.

The place doesn't look that bad.

It's not a bad place to look at first, but you have to keep a lot of asterisks and caveats in mind when doing so.

Sometimes things happen and you're doomed with bad credit. 

This is a business and bad things happen.