If it were me I'd offer her a couple of hundred dollars cash to be out asap, and screen more carefully for a better renter in the future. 

Do we, instead, put as low a down payment as possible (owner occupied financing) and buy several cash flowing REIs to cover as much of the new higher mortgage as possible, using the chunk of equity from the sale of the SFR?

So your renovations will be from cash flow.  

While my cash flow isn't amazing today, I'm investing in areas I think will experience appreciation and rent growth, and if rates do ever come down I'll refinance and be doing great. 

Envelope of cash with a concrete, agreed upon date, will more than likely get this resolved. 

I am going to build a house on it with cash and live in it.

I bought a 110k property in cash last March.

Hello everyone, I am selling an apartment building in California using a 1031 exchange (to buy property in the Midwest) and am wondering if I can use my passive loss carryovers and disallowed losses for that property to offset any boot because I am planning to use the cash pullout as reserves or repair money for when the replacement property is vacant. 

If you plan to operate this product, you still need to have cash to bring to the table as well as enough liquidity for rehabbing (you can get reimbursed through draws, but you start out using your own liquid).

I would like cash flow.