I wish I had found mustachian principles 10 years sooner.

Take this as just my opinion.Here is how I would view the deal: correct me if I'm missing something.maximum possible rent is about $3550subtract 30% for vacancy and maintenance leaves $2485 for principle, interest, taxes, insurance, and your cash flow. 

Without all the details, it's hard to say if you offered too little ... but on principle, if the seller didn't take your offer right then out of relief for finally being free of this house hassle, I'd say you offered too little.

@Lou FrancisI like a balance of paying interest and principle.  

But people underestimate principle pay down!

Is there anyway I can get out of this, such as them just applying the renovation portion of the loan to the principle and refinancing? 

I know it seems to go against the very principles of landlording, but I think if you factor in loss of rent (due to the amount of time it takes to evict someone in Philly) a compelling case could be made that it will save you a ton of money.

My accountant will be tracking payments, interest and principle paydown for us. 

An attorney will give you best practices and tell you what's allowed when it comes to structuring a deal, raising capital, rules to follow in general.In terms of the books, I suggest you get "Principles of Real Estate Syndication" by Sam Freshman and Gene Trowbridge "It's a whole new business..."

Equity accumulation through principle reduction.