Many landlords are very concerned over the effect of the new Oregon law; 608.     

Many owners of these types of properties are accidental landlords who ended up putting in tenants during the downturn because they were underwater and now want to sell but they do not understand or refuse to understand that the tenant being in there negatively effects their value.

Will the Rehab that you have effectively done make up for a market correction thus allowing you to pull equity from the property to properly Repeat the process or do you just have to wait for the market to bounce back before you can refinance?

Right now we are looking into LLC, financing, real estate lawyers (we will need one),  who is responsible for what. 

Today, I find out the eviction lawyer discovered the tenant was arrested for a DUI on 1/19 and believes they may still be in jail.

@Andrew Schrader - If renting a house for $1,000 or house hacking a duplex with an effective rent of $200 were my ONLY options, I would buy the duplex. 

We signed a new one year lease that went into effect 90 days later.

(This has the nice effect of making them feel like they are one of the favorites, regardless of the whether they are or are not.)3.

If what you say is true I'd:A) Hire a lawyer who will likely get a notarized letter from the inspector stating there was no damage as well as scare the heck out of the realtor and potential buyerB) Report the buyer's realtor here: http://www.dre.ca.gov/Consumers/FileComplaint.htmlIf you want to back out of the contract I'd speak with the lawyer first.

Is it cost effective?