I did reach out to the only contractor I know (that I felt comfortable in approaching), to partner up with on this project, however, he's currently tied up with various other projects.

However it could be a great tax saver if flipping is your sole source of income and retirement contributions are not a major priority for you right now.There is no cookie cutter approach to real estate taxation.  

I would not approach the current tenants.  

I agree with Ian that we'll probably see a downturn in the next few years, but maybe disagree on his approach.  

Additionally, I'm front loading the CapEx reserves and will gradually pull back as I approach a figure that I'm cortfable with given many variables of course. 

Does anyone have suggestions on how I should approach the situation?

But you if are not understanding too many things, and it is keeping you reserved from making the move how then do you approach this? 

So, approach a local bank about a "cash out" (commercial) refi loan against the property to do "renovations and upgrades". 

Your approach of finding an experienced agent and lender is critical, because the agent will have to build in that expectation up front. 

There are arguments in the lender world as to whether or not the 120 day rule applies to non monetary default (Like if the guy was just late) but most lenders take the conservative approach and just wait the 120 days until the start foreclosure....and yes, that could get you in and out before we could take action.