We gave it some time running it from across the country, but are realizing that we'd rather not try to operate it from across the country. 

As you gain momentum, you'll realize that each of these tasks are full-time commitments and that they'll quickly become more than any one person can handle. 

We all chase cash flow in the beginning only to realize that it cannot touch appreciation.

I realize the current economics are great for those goals but that is my goal.

When first learning about real estate, one quickly realizes there are about 10,000 different ways/markets/options for investing in real estate. 

Though there's a risk to the buyer, he has to realize the risk with older homes.

I did go there today and realized the water is no longer leaking.

You realize that there is a lot you don't know yet and aren't sure how or who to trust. 

Just realize that at the end of the day it is the Inspector's name on the line if something were to happen, so it is not a surprise when Inspectors want everything opened up to see what is behind the drywall.3) IMHO, the ideal option would be for you to get permits for an expansion and bring everything up to code using those permits.4) Lastly, if your ground floor unit is vacant, I would recommend keeping it that way.

I work with investors that are in your situation, more often than they realize it, with the same motives.