Once it is uncovered and brightened, it will be a wonderful home.

Ditto if you can show that the seller's agent knew about the seller's deceit and ditto again if you can show that the home inspector could reasonably known that there was a wet basement and didn't uncover and report it.I think the seller would be in an especially weak position if he filled out a disclosure and did not reveal the issue.I'd start by documenting everything you can and then talk with a real estate attorney.BTW, the smell of a wet basement is pretty obvious. 

Uncover unknown issues (foundation issues): During purchase from wholesaler, it was disclosed that house has foundation issues and previous owner has repair it with life time warranty. 

Originally posted by @Michael Privman:Two words: Hot Stacks @Michael Privman You have uncovered my deepest fear: that there is something big  and important that I have left out of my analysis!!

As I see it my options are :-Buy a nice single family house and start building equity (this would tie up a large portion of my income)-Buy a not so nice single family house (that has the potential to cash flow) that I can rent in a year or 2 after buying a nicer home for myself ( this would eliminate my chance for cash flow potential until my next purchase)-Buy a 2, 3, or 4 plex.

Wow that is so nice of you to say thank you very much.

It looks so nice and I figure if the other appliances go soon, I will replace them with stainless too. 

None of that even begins to start addressing plumbing issues, structural issues, covered up defects, defects created by the flipper and a thousand other things anybody in the construction business continually uncovers on a daily basis dealing with homeowners when that homeowner calls in a professional to do some renovations and exposes all the criminal activity that flippers do in the name of their profits.Now I hate to generalize, and their may be exceptions in other parts of the country, but I have 10 years of personal experience witnessing this over and over again here in Denver.

It is so nice to have such a supportive, giving, and knowledgeable community of people to be available as a resource.

I am originally from Minneapolis so I roughly paraphrased the Semi-sonic song "Closing Time" with the lyrics, "you don't have to go home, but you can't stay here" sweety.