I would move to a different area but the net profit is just to hard to pass up. 

Have them give you contacts/referrals for some of their OOS clients, and ask them how it is going.If "anyone"asks for money up front, move on.

She'd need to move out and rent a different place for herself.

The biggest change will impact seller finance lenders who will be required to be licensed as a mortgage company once they exceed 3 loans in a consecutive 12 month period and will apply to all entities they use.

Moving forward?

I talked to the company holding the ira and I don't have to pay the 10% penalty.   

But in the process (2 weeks) they sold the mortgage to another company.

A trust may offer some of the same benefits as an LLC, depending on your goals, and allowing you to claim the part of the house you live in as homesteaded tax.Make sure you have the right home insurance and consider an umbrella policy for extra protection.Certainly buying a house, using conventional financing with limited money down as a primary residence and renting out parts of the house to help pay the mortgage, is a smart financial move.

I have a management company that is local for day-day management.

They could have moved away, inherited, or just not care about it anymore or aren't willing to rent it.