So this makes effective use of your nights and weekends critical. 

Has anyone out there purchased an investment property in a cost effective city while renting in an expensive city (such as Toronto)?

Should we just keep on spending money on this unit and keep on putting thing together and get bullied at the hands of this tenant, or should we take a stand and be ready to face consequences (is it worth the damages)? 

Not much water damage I'd guess.I don't know anything about redwood.

Filling a vacancy is less costly than prolonged damage and losing $200 every month.

The property had lots of water damage, plumbing issues, mold, the landscaping was out of control.

just an FYI:...being a landlord is about money. nothing else. swallow your pride, pick the  up the money. between vacancy, cleanup, damage, re-renting.....evictions are costly and better avoided. when renewal time rolls around, kick them out. if you have an NRR in the county, use it when that rolls around, and kick them out.  

Once you know your What you could sell them for, then you can answer the question of what is the effective ROI based upon current valuation.

It has good windows but thr floor is probably damaged under the kitchen cabinets.  

You don't know how to wholesale effectively, and you want to virtually wholesale?