Purchasing a “distressed” property and “repositioning” it requires significant capital for improvements, build outs, holding costs, maintenance.In looking for that “needle in a haystack” slam dunk great deal you’re competing with very knowledgable, greatly experienced investors with the cash to make no contingency offers and close in a few days.  

It’s better to spend a little now than risk costly mistakes later.

If you find someone that will let you supply the materials and work for labor only and sign a contract you supplied , you have hired an employee , a laborer , not a contractor .

Determining the cost on something like this is only something you'll be able to find out by talking to the city.

To leverage the equity for financing my next deal, a second mortgage seems like a more cost-effective option.

With running this "business" there will be operational input costs.

If they want to pay $1,300/mo as is, saving you the Reno cost.

These methods include: Detailed Engineering Cost ApproachDetailed Engineering Cost Estimate ApproachSurvey or Letter ApproachResidual Estimation ApproachSampling or Modeling ApproachExperience or “Rule of Thumb” ApproachIt’s important to understand the differences between the approaches including which one best fits your property and the reliability of each approach.DETAILED ENGINEERING COST APPROACHThis approach compiles the costs from construction and accounting reports to build a report.

Namely, that if a tenant (in this case accompanied by a whole family) ends up stop paying rent and I would be on the hook for both covering the mortgage and dealing with open ended legal costs and time.

By my estimates, pricelabs cost me approx $25K last year in lost revenue for some of the same reasons you've listed in your post.