I am worried that if I decline the settlement offer and pursue legal action, that even if I win, my chances of actually getting the money from him are slim.I know no one can really give legal advice here, but I'd appreciate some good ol' advice just the same.

Hi Amanda, I think what it comes down to is not whether you have the right to take legal or financial action against your tenant, but rather whether or not you should.

Also I'm not sure if any one can answer this question without being a lawyer but is it too late for me to take legal action against the seller?

Well, she claimed that she would take legal action.

To me over leveraged means you have big car notes  your CC are close to or are maxed out and your only making minimum payments you go buy furniture and you finance it.. you buy real estate with the least amount possible down at market prices.And your cash reserves would only last you a few months to service all the debt.So no retail debt pay cash for anything you consume or use  OTHER Than a vehicle and decent amount of TRUE equity in your real estate no FO equity IE refi appraisal but you know the home would never ever sell for that on the open market. bascially follow Dave Ramsy and @Steve Vaughan  over the years on BP has written some really good comments on how to build an empire while balancing family life and fiscal safety..  

@Jon-Michael Cortez-Alonso not sure how this will play out for you, but every legit lawyer I have met won't touch wholesaling...attorneys only get one license and when you knowingly draft docs that will be used to mislead consumers and ultimately result in brokering deals without a licenses...well...There are probably a bunch of bottom of the barrel lawyers you can connect with to get the docs you need.And yes, brokering deals without a license is illegal in nearly every state in the country...

Keep learning about your strategy, how others have had success with it, and where things have gone wrong for others in the past.Daily action: Keep putting one foot in front of the other, every. single. day.

Now, on the other hand, if the tenant is lying and the home is in excellent condition and you have the COC then yes, you can hire a lawyer and take other actions. 

I question how this could provide cash flow worth the effort.The rent per unit of $500 will get largely consumed by expenses. 

Its been a while since I've posted on Biggerpockets but I'm constantly consuming video content on YouTube.My name is Ray and I'm a Real Estate Investor in Rhode Island.