If this is really the underlying problem, you're unlikely to get sued to performed and very likely to lose your EMD.

The FHA loan may require the seller to perform repairs, or pay for termite treatment.

Get the borrower to re-perform.

This includes my willingness to do any kind of grunt work or seemingly small tasks for/with you.

Secondary/tertiary or submarkets just outside major metros typically have low rent appreciation, lower returns, but are generally more stable; like you said, I think poor performing assets in these areas are great to invest in an "up market".

Putting everything into the performance of one property is actually riskier than buying multiple properties with mortgages in many ways. 

We were set to close on our first duplex in the homestead area and were performing our final walk through when we found out the place had been completely ransacked by someone who stole the copper wiring, furnace, water heater, and destroyed the kitchen and bathroom doing so.

I've read books (Turning Distress into Success; Performance Anxiety; Seller-Financing & RE Notes in the Dodd-Frank Era), explored the posts in this forum, listened to @Bob Malecki 's BP podcast episode, and now have some (hopefully reasonably intelligent) questions to ask.

So perform you due diligence. 

Breaking down the goal in this manner will give you smaller more manageable tasks to focus on and make the big goal more realistic and less intimidating.