When we resell / refinance (we have 12 months), we will be able to pay her the 170K she needs to get.Her attorney suggested that if we close on the property and go out of business, she will not be able to get her house or the 170K.

Any suggestions will be very much appreciated. 

So it's time to start going out and meeting people, and doing some of the analysis that the books suggest. 

I am going to meet with him tomorrow and have some questions I am going to ask him, but I am looking for some suggestions as well.

This can be a conventional loan, so I would suggest that you with conventional lenders for better rates and terms. 

It sounds like they are suggesting to you to establish series LLC = one tax return with multiple entities underneath one parent LLC.

Just a suggestion, I've had some luck using the approach; "obviously you don't like dealing with me, let's come up with a solution that works for both of us so that we can move on with our lives and not have to speak with one another ever again."

I am currently on the hunt for my first small multifamily property in South Jersey (Camden and Burlington counties) as well.While I have not used a property manager yet, a few local investors suggested Mike Williams of Sureway Property Management.  

Suggest you have it appraised.

The lender I am working with suggested a 5-year ARM with interest only payments.