@Ryan Watson - I also recommend reading the book Tax-Free Wealth because the author (a CPA) advises against using a self-directed IRA for real estate investing.

The tenant was making up crazy tales to try to get into your unit.Definitely always check previous rental history, not just the current one.

The HOA management also said that even if the owner (who lives overseas & rents out the unit) authorized them to enter the unit, they would not go in because they would have to call them to a hearing.

Contact the local housing authority (who most likely administers the Section 8 program) and ask to speak to the administrator.

When they do want to look inside, I always set it up with the owner and accompany the investor/buyer on the visit, especially if I have no history with the investor.

You need to get a letter from the borrower requesting the loan be sold along with an authorization to obtain information.This will set the stage to give a lender another option other than foreclosure.

And even if you make a mistake, if you can show you have a history of going the extra mile to do it right, it will help vs. if you don't.

History shows that she does not fulfill her financial obligations. 

Or is it something concerning the property's history such as liens against the property?

Your water bill should provide a usage history, and you can show this to the tenants letting them know any cost in excess of (average usage +X%) will be billed to them monthly.The real problem here being that the Tenant is going to end up destroying your W/D.