While this is at least something, I just want to make sure that I'm maximizing my current cash reserves before exhausting it on a single option which provides a low amount of cash flow.So I'm just trying to work through all of this and determine what the best course of action is with respect to making progress at a reasonable pace in my market.

Will definitely look into this and take some action.

(I sure hope your out-of-state experience goes up from here.)BankruptcyIf the tenant files bankruptcy, the eviction process is subject to the automatic stay in the bankruptcy case, and if an eviction action has been filed, it will be dropped from the State Court’s docket to be reset if the tenant’s bankruptcy case is dismissed.When a bankruptcy case is filed, we usually negotiate a Consent Order Conditionally Terminating the Automatic Stay.

Then if you are going to try and maximize the return in a flip, you also must have a quiet title action done by an attorney who specializes in these.  

No substitute for action. 

My next course of action I suppose will be to invite th seller for a coffee to go over his reasons and see if we can come to an agreement.

Renter Inc, donotrentto, tenancy bureau, ratetenants, tenantdata, theRRD and etc.Check prior rental payment history, positive or negative, if they have been reporting it through a payment companies like PayLease, PayYourRent, RentTrack, ClearNow and eRentPayment.Compile all the finding into a single report and provide it to the landlord including a list of sources where the information was archived from so it could be provided on a "adverse action" notice to applicants as per FCRA requirement. 

And while it doesn't give you a very solid action plan, it gives you enough material to have a good conversation with your CPA.

If she only lives there for the required 2 years and has 8 years of non qualifying use then she can only get 20% of the gain excluded.So the more I delve into this the more it seems like it's not the best course of action.

Action over perfection.