Unfortunate situation but it sounds like you already know what kind of adjustments you need to do in your lease and screening applicants for the future. 

Might effect adjacent property values. 

Keep in mind the Millennial effect... a widespread trend away from SFR and towards apartment living (and bigger city apartments more specifically). 

It sounds like you want to learn how to make money and the money you want to make is Buy and Hold investing in something that takes care of itself.

I'm very green at this and I am in the process of submitting an offer on my 1st probate deal so forgive my innocence if this question sound very mundane. 

No one should buy here without truly understanding the implications as the fine is $1500 per month until complied with,The law takes effect Sept 15 but I have it on good authority the clock will be delayed until Jan 1.

Sounds like a 203k fit as a fourplex. 

It sounds like the lender is going to have to cut their losses on the existing owner and foreclose on them or do a short-sale type transaction where you purchase it, but at a value less than what the lender owes. 

well this sounds interesting.

The details are as follows:Current Price: $370,000My offer: $320,000Condition: House is in rent ready condition but I have added $5000 for touch ups here and there2 Family House with each unit renting for about $1300Insurance/yr: $700Taxes: $11,500/yrLoan: FHA with 3.5% downpayment (30yrs)Here is a link to the analysis that I did as well in case that helps, this is analyzed with both units rented out to know whether the investment is sound, even though one will be my primary residence:https://www.biggerpockets.com/calculators/shared/2...Please let me know if I am missing something or if these other investors are offering too much.