At worst, I think I could make $800 a month on some sort of house hacking strategy - live in the main part with a roommate and rent out the MIL suite, or rent out the main house while living the MIL suite.

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I guess what sort of liability is worth doing that since the deductions are the same and I figure the auto insurance must be more since it’s commercial?

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Tell them what you have, in general terms, and see if someone is willing to enter into a JV deal of some sort. 

Secondly, you should be able to get records of notice of default, then you know who is in some sort of financial trouble- that doesn't mean the property is vacant or distressed. 

. $40k can buy you a place to rent in a few select towns in South Jersey ... on occasion with renters already in place, but those areas will be rough. with $40k you have many options.

I sure did and I'm waiting on references before I select a contractor.

(This sort of information isn't readily available and most traditional bankers are equipped for this conversation, unfortunately.) 

If the HML requires one, they will be selecting the appraiser, not you.