Sounds like you need to shop around for a different lender. 

He sounded desperate to sell when I talked to him because the house belonged to his deceased brother, which I assume makes him the landlord.

Also, purchase full replacement insurance.

Having said that, it's no picnic, and there will be times you regret quitting, but it sounds to me like you've already decided. 

Sounds like you are trying something tricky for your first deal, which adds to the complexity.

We unfortunately had to replace the refrigerator and dryer this year which made us cash flow negative. 

Sounds like we're in the same boat.

Reliant is a company that has full real estate cycle experience and puts out several deals in self storage a year. 10 First Federal is another company that is younger, only half the age, but has disruptive technology where they replace the on-site operator with technology, which expands operating hours, removes the largest expense and increases NOI.

As Anthony mentioned, this sounds like normal wear and tear.

Usually the payoff from lender will provide an itemization of HOA (if applicable), PITI, Attorney Fees, and all other fees that will drive up that debt.Is the title still in seller's name, if not, it will have to be reinstated in seller's name.This is but a fraction of what you will have to deal with when dealing with preforclosures.On the surface, it sounds promising, but there has to be more time, so the clock will have to be stopped by a TRO or Bankruptcy or even a possible contract from buyer.Could you pay what is in arrears and try and modify the loan?