Its important for the audience to know you did not buy turn key... the seller maybe you got with a marketing company .. but true turnkey would have the home completely remodeled then a new VETTED tenant would go in.. there would be no hold over bad tenant like your experiencing.. someone has done you  a really bad deed here.  

We don't want to throw money down the toilet for the next year on over priced rent (Nashville area) when we could purchase a home that needs some rehab help and build equity as we live there by fixing it up and that we can eventually use as a rental property after a year or so.

For my rental units (middle of the road remodel).

Hey David,Google my remodeling solutions name and you'll find my cell. 

A few weeks later they called the board of health on me.I review the items from board of health, and they are very ridiculous.Example, stain on the ceiling (need repair), the toilet seat is old and not smooth (need repair), tenant has no access to the basement, I don't post my contact information in the building ... etc.What is your opinion on this matter if you have encountered it in the past?

That was a big bill so I decided to just remodel both bathrooms and get it over with since there is already big holes in the walls.

The second report is if I remodel the 3rd and 4th floors to be apartments and rent them out at a conservative market rent.

There WILL be stress as you search for that initial property to buy at a good price, and as you learn how to deal with tenants, get phone calls for a leaky toilet while you're having supper with the family, or that crazy cat lady with pee all over the carpet. 

I do have a background in building and remodeling so there is a chance that if we get far enough into this and can generate enough income, I may do this full time.  

I'm also looking for a general labor crew: someone to install toilets, lay laminate flooring, screw in odds and ends, and build a custom kitchen island.