It is a fine balance and varies by location as well as individual seller. 

Property Info:3 BR / 1.5 Bath / 1200sq ft Bought in 2017 for $163500 Down payment of 5% + $3k in closing costs30 yr FHA loan @ 4.375% Remaining Principle Balance: $145kMonthly rent: $1500 Vacancy: it’s never even had to go to market to fill, but I’ll say 1%/mo just to be safe Cap Ex: I bought it freshly renovated, but I’ll use 5%/ mo to be safe Repairs: 5%/mo to be safe, but in 3 years of owning it I’ve probably spent $100 total on repairs.

It's a balance that more experienced investors with money know how to walk better, but a lot of first timers are just doing it because they don't have money.

The loan is a simple interest loan, each month your interest due that month is simply your outstanding balance at the interest rate, divided by 12 for the monthly amount.  

When I expressed my displeasure and said I won't be paying they threatened me with putting a lien on the property.They claim that the pending balance is $1066.

You'll find your balance between real estate, paper investing, running your own businesses and living a large life. 

Since you’re still going to be responsible for all payments to loans, credit cards if you’re banking on the sale to pay off balances before it hits interest.

I plan to find the perfect balance between being tactful and treading carefully and being polite yet assertive.

If a borrower stops paying on that first mortgage, and then the lender goes to foreclose, any equity that might have been had in the property is now gone because default interest, late payment penalties, legal fees, etc will eat up anything left after the principal balance of that first lien is paid.

I am guessing the whole site will need to be cut/fill balanced, sewer and water mains run, all the streets rough graded, erosion control, stormwater management all in the first phase?