If the numbers make sense, the plan is to approach the seller and attempt to get a lower price for this "2-story" building which has vacancies, since that's what the owner is selling.

What troubles will come after construction and attempting to sell? 

Quote from @Amanda Henry: We are attempting to collect a $572,379.35 judgment against Chau Ong for investment fraud in Texas. 

Setting rent significantly above FMV could be seen as an attempt to shift income or inflate deductions, leading to potential penalties.

Quote from @Gregory Wilson: A few things there, Brendan.First, an LLC with you as a member and your (wife, son, pal, etc.) partner as a 1% member will file a Form 1065 which is about one tenth as likely to be audited by the IRS as a Form 1040 with a Schedule E rental activity (which I presume you will attempt to show is an active business).Second, you want an LLC because when your local Alabama handyman drives his girlfriend's uninsured truck into a van load of U of A medical school interns on I-22 when he goes  to get some shingles for your roof, on your business, you don't lose everything you have or ever will have to an uninsured claim. 

For example, I see newer investors attempting wholesaling or bird-dogging for other investors to generate additional income to invest.

Not just you throwing bleach on it and painting over it.In general it sounds like you were notified of the issue, attempted to correct the problem but were unable to due to the tenants non response.

If you are attempting to use income for the non-conforming unit, they will need to verify that it can legally be used as a rental unit.

It's becoming very obvious that this isn't a sellers or buyers market, but an attempted suckers rally.

My original plan was to utilize a real estate agent to be my property manager that I met through a Dave Ramsey referral program, but I'm exploring if I should attempt this on my own.