The tenant is on permanent disability, and has been hospitalized a handful of times in the two years that she has lived there.

That should give them enough time to find a new living situation, in my opinion.  

Here is one I added to this list specifically resulting from this transaction:      Are there any persons or pets presently living in any of the units that are not included in the lease agreements?

Also, how does interest taxation work if you live in state X but lend to a syndicating flipper in state Y?

I don't know the specifics of where the line in the sand is for you regarding the benefit but I live in a high cost of living area.

Sell it and reinvest it in a house hack where we currently live (we are currently renting from a relative below the market rental rates but home prices are very expensive where we live.

Or SFH, live in for a year and then rent.

@Ben ElliottI live, work and invest in Terre Haute.

I think one of the easiest ways to start is a house-hack and I still do it myself....Anyhow, I am an investor, realtor and lender and live in Fort Lauderdale so I can definitely give you some pointers in the south Florida market. 

I live in Denver and she lives in Jacksonville.