The worst part was that they had a baby living in the house with them, after we bombed the place there was over 1000 dead roaches, and I found a live snake behind the hot water heater 4 feet from a mattress that was laying on the floor that someone was sleeping on.  

Our knowledge of the zoning, water rights, easements, etc of land in the area was invaluable.

It also had water drainage issues and no landscaping.

Renting out by the room can be tricky, but remember that your utilities will be used up a lot more the more people you have in the place -especially your water bill.I would have it in place that utilities are split equally between all tenants.

You noted your water retention is off site, so that gives you more buildable space. 

even back in 2002 when i started funding out of state buy and hold folks.. not exactly sure on eviction but I know for sure you could not turn off the utls and they run with the land  so many tenants simply do not pay their water bill and such in that city as they know it can be turned off. 

Rehabbed both apartments, new roof, siding, windows, furnaces, AC, and water heaters What was the outcome?

By the time you add in ice&water shield, vents and supplies, you are close to $250 / square in materials alone.

Does it have city water/sewer?

Is the roof updated, and are there modern electric wiring and new water pipes?