If the house were in perfect condition, it would be worth around 250-275k but as of now, selling isn't an option because we may use that property in the future for our business. 

There have been times when (left in such good condition and clean)  I've refunded when they left early.

7 - What are the ground soil conditions?

Never built in Houston before so take my feedback with a grain of salt but I'd put money on it being impossible to build a duplex from scratch for $125 a foot (including everything from drawings, engineering, permit fees, general conditions, labor, material, landscaping).Out here in AZ the builder cost is going to be $200 a foot at best, but add 20% on top of that for the client cost.

Regarding the property condition, thats on the inspection report and hopefully you went through it with a fine tooth comb.

These things affect the property’s condition and your relationships with other tenants, which could lead to bigger issues down the line.

First step is: 1) Figure out your budget to fix this up to a nice condition. 2) What is it worth based on comparable values in the neighborhood. 3) Is there a worthwhile profit?

The house, in the condition it is in, is currently appraising at about 350k.

It is in good condition and centrally located to shopping and the base so I'm surprise that it has been sitting this long. 

Refinance – property A loan is assumable, “under certain conditions” (verbatim from the clause).