We both have over 700 fico midscores and very good incomes...She would be owner occupied ( she currently owns a conventional condo) and I would be the other non owner occupied owner( I own an fha home).

In an area of rising rents and everything else staying stable, by definition, operating expense ratios will decrease.From all the non-residential commercial investment opportunities I have reviewed, expenses seem to hover in the ~25-35% range.

Price appreciation is slow if it even exists but spreads in purchase prices are high.  

Also, if I do not purchase a new place, can I use the funds to pay down an existing rental property I own?

The property paid for virtually all of the work, non of it was out of pocket. 

The existing mortgage is around $80,000 and we offered $25,000.

I don't believe that many people on this site have been in that much of a financial bind (after all, no one would ever invest in real estate with negative cash flow), so it's going to take some creative traditional and non-traditional methods.

Often times, you can just takeover such an account and make it your own.With any non-spousal IRA (self-directed or otherwise), the IRS rules stipulate that a certain amount must be distributed from the IRA to you each year. 

Non-payment?   

Here's some backstory before I get to the details - I am in the process of evicting one of the tenants in that 4 unit for multiple lease violations (non-payment of rent, installed a window a/c unit and has not taken it out despite multiple warnings, and has had 2 people living in the unit who are not on the lease for the last 6mo).