I am wondering if I used some of the money I received from the sell to pay off my debt if that would be financially wise vs using it towards the purchase of my next place?

If this is a bad deal because of $1,500/yr in interest run away and have your family sell the property. 

The way that I see it, when they sell it down the road, they will use me to list it.

So selling it to someone when you can't give them clean and insurable title can sometimes be an issue.At that price point, not so much. 8k properties tend to have a buyer pool that won't care as much that the title isn't insurable if they see the reason why is because it was bought at a tax sale. 

He can just put a mechanic's lien on your property and he will get paid when you sell.

If you do go to sell it and it appreciated say 8%, that is going to be eaten up by your closing costs...Personally I do not see this as a deal.

Stuff that is good to look into, it does cost a good amount to pay each month, but there are people who want to sell today and need a quick offer.  

Hey,If "building class designation" is the same as zoning, then this seems like it can definitely be appraised as a two family, with both the legal and actual designation as a two family.Depending where in NYC, that may not help your valuation, as primary residences sometimes sell for more than investment properties, so check that out before challenging the appraisal and definitely before paying for another one.Double check all this with your lender/broker as well.Best of luck!

Quote from @Brian Cerezo: I’m in search of a roofer that can patch up my roof in my rental in Canton Ohio so I can get it ready to sell.

Flat Fee buyer agency to reduce acquisition costs (get ~2% of the sales price back), and flat fee MLS listing to reduce selling costs to ~$500.