Also grading the surface to force surface water to run away from the foundation even just a few feet can make a difference.

Land acquisition, permitting, grading, hardscaping, wells/plumbing/septic, electricity, shared recreational amenities . ..

I am 59 years old and my father and mother got divorced when I was In the 5th grade and I think my father was married about 4 times and he is now divorced.Even though they now have a good relationship (my origami mother and the 4th wife) but his latest marriage sent him to jail because he did not pay alimony.  

Either way it won't work in D grade in maybe low C grade. 

It's the perfect storm of low end houses (they look nice, but they are all builder grade stuff where they are throwing these homes up by the thousands every year), high occupancy with most stays having a high percentage of young wild children, and tired parents after a long day in the parks that are too wiped to police their kids properly.

I think you may have trouble getting a lender to admit that the property can be both an investment property (for your parents) and a primary residence for yourself.I think it would be much more likely that a lender would give you and your parents an investment grade loan. 

There plenty of other opportunities elsewhere, my clients are involved in institutional grade properties across the country.

If you go to Cleveland give The Ultimate Guide to Grading Cleveland Neighborhoods a read first.

Gabe,The top theory from the reports I've read and contractors I've talked to is that water got in due to a graded slope towards the house, and a sump pump that was not functioning properly.

Also, you probably need a civil engineer to make sure everythign is viable, since part of the approval process is having a civil draft up plans for sewer, water, grading, etc.