It could be stressful if there is a plumbing or heating issue and you're several hours away. 

The other option is a water supply line, but that would typically resulting a steady leak and the damage would occur faster.Really think about what is above that space that could cause the issue.

So the more houses we see the more stuff we can pinpoint that will be an issue with the house/property.

The reason being they did not want to be caught in a lease and have to deal with potential lease issues down the road.

.- cost is an issue.

You would want to know if anything was ever built on the land (maybe a house burned down) because if there was a house then you would have potentially buried septic or oil.Buying and holding a lot for the future with topographical issues is only worth it if the price is negligible IMO.

Hey Alton, hows it going trying to find properties for $30,000 to $40,000 & is sourcing private money an issue?

I know I will need to get some legal advice, but I am really looking for some input on where I should even start. 

First, the tenants signed a legally binding contract and do not just get to walk away on a whim.

Real Estate Professional status and Trade/Business are two completely separate issues.