If the background check and credit check come back clean, then I approve the tenant and walk them through setting up online payments.

Clean them really well with something like TSP and use an enamel paint and let it fully cure.Renos for a rental vs your own home or resale are a bit different.

That extra buying power will give me a better chance of finding a property within the area I’m looking in.

Both properties owned free and clear by our mother but my brother has the power of attorney.

The disadvantages in my opinion are the meeting and greeting and cleaning up after people. there is more management involved and what would happen to your profits if you hired the duty out? 

Your only option now is to come up with the money to buy the place or come clean and admit everything to the owner.

Provided your Sub2 purchase closing is done complete with all the necessary paperwork (e.g. limited power-of-attorney between the sellers and you), refinancing should be no different than a normal refinance.Sub2 can be heaven or hell, depending on the quality of your closing paperwork.

If you don't have water, sewer, and power at the property already, it will substantially limit how many units you could feasibility build even if 100% of the land was otherwise usable.

I want to avoid holding costs with him holding onto it while we renovate, but how to I make this as clean as possible?

If you start pooling money from people who are not full partners (i.e. have decision making power), you will start to cross into the territory of securities, in which you will be subject to SEC rules.