Both times we visited the property, we did not feel very welcome or comfortable on the block, and a search on Trulia showed the area to be high in crime.We were pretty conflicted when the offer came back accepted (contingent upon us using their preferred lender), and we ultimately decided to pass on the property.

I actually see this as the worst of all choices as it limits what additional properties you can purchase and keeps you locked into a non-performing asset.I think there is much more risk keeping your money locked in your current house than if you were to redeploy in a MFR or even just dump it in index funds.

The exact wording and length of time required varies by state.Maybe an eviction lawyer / service would be a good choice this first time - then, you can watch what they do.

Start by reading the Ultimate Real Estate Investing Guide: https://www.biggerpockets.com/guides/ultimate-real-estate-investing-guide/introduction2.

I'd give the prospective tenant a choice, 1. one month longer than projected completion and they must vacate on that date because you will be finding a new tenant 30 days before they leave or 2. two month's extra and if there are delays for any reason you will allow them to remain until the house has a certificate of occupancy. 

My name is Anthony and my wife and I are looking to start investing in real estate with the goal of building 'passive' income and, ultimately, gaining as much time and location freedom.

A reasonable choice that someone refinancing can make.For those of you looking to buy right now, watch out for that.

My choice is TenantCloud.

my thoughts are that as long as you have the cash or can get financing to fund the soft costs and hard construction costs then i think you would turn a profit. as you said, your betting on avg house cost, hopefully you've done due diligence to check that but ultimately if that area is in a housing shortage then I think the market will eventually meet or exceed 

I will need to live in my first property because I will have no other choice.