However a couple larger items that should have been discussed: the pipes would freeze every winter (we've since found a fix), no water shutoff exists in each unit, the well pump has to be turned off and cut water to all 18 units, no pest control was ever done on the property, there was a unit that would take on exceptional water during rain due to improper prep and installation of a new concrete slab.

Hard money, private money, joint ventures, even lines of credit secured against existing assets—there’s a ton of capital out there looking for strong operators.

If you use cash flow - it's more safe imo and debt leverage is risk but reward if you execute on a value add project.

Can I just say the short-term rental thing is actually very easy conceptually.Two basic requirements exist:1.

At that time we could renovate the ground floor apartment and potentially turn it into (2) apartments for a total of (5).My questions come down to how do we deal with the existing 40k mortgage, whether we can make it work so her parents aren't paying much in rent, if anything at all, and whether or not we set up any legal entity, like a trust to help the legal situation of paying off her sister down the road. 

If you have a business you can grow and get financially rewarded that is higher priority then leaving that.

In return for excellent service I'll be offering repeat business and I'll happily provide referrals to my existing investor network for those top performers. 

As a first timer with no existing properties and no experience do you recommend looking into long distance investments and managing thing remotely? 

That strategy wouldn't fly with just about every wife that exists now or in the history of the world

I am perfectly fine holding X amount in real estate.If I do see an opportunity another option is to lock it up and sell one of my existing if I think this property will perform or appreciate significantly more.