Even less that are finished and useful.An actual finished and useful basement is a real pita for the appraiser due to lack of basement comps.

Your lack of being able to see the place.

So I've been investing in tenant occupied SFH for just short of 10 years; I took a 2 year hiatus due to a job change and lack of funds but am now ready to begin purchasing again.

Could be anything from structural issues, to a lack of functional plumbing, to peeling paint.

What if you DO find clear signs of negligence or lack of cleanliness?

We've been in Cleveland for 5 years and have been able to sort through some of the bad apples and now just work with the good ones. 

In essence this sounds like becoming a real estate agent for commercial properties just without the real estate license. sure just pop on to every HML s website and you will usually see a tab for broker submissionsand join appl   association of private lenders.. many of those are brokers.. go to their vegas event meet all sorts of senior lenders. yoyu work for points.. and have no monetary risk other than time. 

My question is, what are the key things to look for when hiring a contractor, and why do there seem to be so many bad apples?

At the beginning, if you lack experience and education, then you bring in excess cash to a deal to learn the process.

I don't know the size of this deal, but with RTOs, I'd for sure run the contract by an attorney at least and probably a CPA to ensure you aren't biting into a rotten apple and you get a good idea of how much cash flow is left in each contact if you can't figure it out yourself.