I've found a few deals but the properties are inhabited by tenants who are either in the process of being evicted or they need to be evicted for being behind on rent.

Transaction costs are there so it may very well depend on price point and time expected to inhabit.

The house will need to be finished and in habitable condition when the appraisal is done. 

Often that means all systems, ie, electric, plumbing, mechanical, etc must be inspected and approved with the current code regs.It's best to know BEFORE you buy or try to wholesale what exactly the powers-that-be will require to un-condemn and give the property a c/o so it can be inhabited again.

The location for this deal is situated in a smalltown with around 1000 inhabitants and the population has been decreasing steadily.

If you’re looking at a buy and hold rental, the shelter will certainly increase your turnover rate because it won’t take tenants long to grow tired of the drama that the shelter inhabitants bring to the neighborhood.

@Shannon Richardson, I watched your video... it was difficult to see, but it doesn’t look inhabitable to me!

Replacing everything wouldn’t work ($) and the neighborhood would continue to see the inhabitable house with weeds growing up head high.

I'm assuming this is currently a personal use asset, and not already a rental that's just taking a long to turn over or renovate.We first have to examine when a change in use occurs.Change in use will occur, in this situation, for a rental real estate asset on the first date that the asset is both (1) in habitable condition and (2) advertised as available for rent.That doesn't mean you'll be able to expense based on a whim, it just opens the door. 

The liquor store inhabits one of the retail spaces and does not pay rent (the building and liquor store are owned by the seller).