Also if you do keep the house, would you attempt to purchase the next house using equity if possible?

I usually conservatively bank on getting one call a quarter per unit on average, but my portfolio is made up of 100+ year old buildings.If a particular tenant is contacting me for minutiae, I attempt to reset their expectations. 

They don't want to learn how to invest they want to sell their house not buy more houses.Good attempt on his part but waste of time.

I had the police go to the property and attempt to remove the guests. 

We had a failed attempt at 1031 exchange last year but were able to eventually buy an apartment building so the losses generated by the cost seg. study will cover the capital gains we would have had to pay.

There's no guarantee that you wouldn't get a fine if DOB gathers that the unit is actually occupied as an apartment, but it does happen that people who attempt to legalize existing illegal conditions before they are discovered by the city avoid a fine.

So far I have racked up $600 in plumbing bills attempting to rectify the issue.

I've attempted to contact each utility company  and they have been less than helpful. 

So she rather sell it then hold n attempt to build.

I attempted to get the loan thru Quicken first.