Next after making some visits to the property we learned that she has been allowing her 2 adult kids stay at the house even though they were not on the lease. 

I’ll definitely meet with Finance and the JAG for their take on it but figured that there might have been a few who have actually done this and were either successful or shot down and could share.But I agree, the additional interactions with Finance alone probably makes it not worth it... just kidding, we know it’s a thankless job so thank you to all the Finance troops out there!

Life got in the way and I adopted a bunch of kids and I didn't do any more real estate for a few years until recently I've been interested again.

Because mommy foots the bill or the kid gets easy money through student loans.

For the past two years, I have had positive cash flow about $100 a month on the property.However, last year during turn over, my property manager worked really hard (20 plus showings) and finally rent it out, and several months later,  the tenant reported that they don't feel safe for their kids to be in that neighborhood.

I would, however, love to explore areas within the GTA that could have that strategy applied to it.

I would not have rentals in some states and regions and if I lived there I'd explore other options.

I always advise my clients to explore a HELOC before a cashout refi, origination is less, HELOCS can be reused once paid, and if you wont have to take the rate hit that comes with a cashout refi. 

I have a tenant coming in asking to rent the place, who has a partner with a 12 year old kid (the kid is his partner’s).

Your 26, which means young, probably single, no kids.