Someone should have done a better job of inspecting prior to returning the security deposit. 

I believe this may have been passed down to them prior and they don’t really do this often based on the condition of the home, and lack of communication.The back yard is overgrown with weeds, the sidewalk has been damaged and rubble for years now.

I've read online that you can get an FHA construction loan, but I can't seem to find much information or others with prior experience.Any thoughts or advice?

The reason I ask if it used to ascertain damage to something on the lot (water/sewer/utilities hookups or something) and you don't have pics and mutually signed documentation from the lessor/lessee upon each tenant's move in prior to your ownership, would you be able to justify a charge upon move out?

Also, the prior management had done a poor job and gave us upside in operating expenses and in rental income.How did you find this deal and how did you negotiate it?

Prior,  it was in inflation adjusted bonds.  

The bathroom is not properly ventilated / does not have an exhaust fan. we ran into this issue and gutted the bathroom after the owner prior let this continue for years.

It raised a couple of questions in my mind about the risks of wholesaling, namely the implications in the event that you assign a contract and the buyer backs out.It seems to me that Paid at Assignment would both:Result in committed assignees, otherwise they would risk losing the money they paid the assignor, andProvide the assignor with a significant cash cushion against breach of contract if they cannot locate another buyer prior to closing, and ultimately decide to cancel the contract with the property owner.But this raises another question. 

I would suggest that any time you review refinancing that you examine it will a 3 year "break even" threshold.  

Should I require them to get a signed lease prior to closing and them assigned that to me?