Sounds like the smoke damage is already done.  

There is a window in the basement that is broken and I believe this is the cause to the mold problem with all the snow and rain we have been getting in the area. 

I just stayed until noon on Saturday cause I made the mistake of sitting right at the center of the huge room and felt that walking on the guy with backpack and all was a disrespect.

This may cause an issue with you renting a condo instead of buying as well. 

Cause I dont have their expenses yet. 

Biggest problem I see with those older home conversions is most of them require the owner to pay utilities cause it wasnt made for and split up in apartments. 

Things like fungus damage of the subfloor, support posts in the crawlspace in soil contact, hairline cracks, and (scariest to me) no foundation on a portion of the structure though majority is pier and block.  

If I understand correctly, both are causing problems. 

Specifically, I need the door frames and trim replaced and new doors hung where the tenant and their cat damaged everything.

Any potential buyer of the note, besides wanting a discount for lack of payment history, is going to insist on doing the due diligence on the borrower you should be doing even though it's a family member.It's definitely unfortunate that your family member knows you have all the money to lend them, and no partner to veto - it could well cause issues for your with your family member if you turn them down ("I could be living in my own home right now if it wasn't for RON being stingy with his money and not trusting me").Off the top of my head I can think of two ways to wiggle out of it, if you want to do that of course.