I depend on another department as well for answers and I too have to wait," and then asked if I would "be open to an installment of a partial payment?

that would lower your down payment requirements - you could keep your primary as a rental, and move into a househack. 

You can simply convert passive income to non-passive via Sch C via management fees and use Sch C to fund the 401k.

However, it would provide us with the necessary funds for the repairs and potentially a down payment on another property.

However I feel the PM should have notified me early on about the complaints from tenants and non-receipt of rents from the housing authority (it is still a mystery on why the rents have not been received). 

I'm leaning towards a smaller non-refundable deposit vs a full month rent that is refundable.

@Josh ShamoiliaWith a large loan you will have a large payment that will effect your cash flow. 

Other than explaining how his children will continue to receive the payments after his passing what can I do to get him on the positive side of creative finance?

FHA loan with monthly payment including taxes about 7800. the other side would get up to 3200.

It will work for me not just for buy and rentals but for anything I decide to do such as building a ground-up spec home or buying a non-performing note or doing some lending.