He's doing a tornado rebuild in Rowlett now.  

So we are making an offer on a SFR we can live in and fix up and maybe even take on a roommate while we rebuild our savings to buy another SFR we can move to and rent this one or just rent out the next one if we decide to stay.

No way to know for sure until you get some estimates or think of a plan to fix it yourself by either going over it with some cement or rebuilding it with concrete or wood

 Unpaid student loans and even a criminal record probably as a result of past mistakes or the

bad choices made, All of these negative records in one way or the other
cause serious damage to my credit-worthiness...

If the goal is to demolish, rebuild and resell, that's exactly the same (from an IRS standpoint) as just rehabbing and reselling. 

I have a project in downtown Palo Alto which presents an excellent opportunity to demolish the existing building and rebuild a 4+ multi-unit residential building. 

Scope of work on an $80k budget is: * build out ofbasement apartment down to the studs* upstairs new kitchen on existing footprint* replace/enlarge 2nd story rear deck* new roof, door, & electrical for 2 car garage* add a bathroom in existing finished space on the 2nd floor OR rebuild one gable at a lower slope to allow finishing out current space under the eaves as a master suite* perhaps other stuff we haven't thought of The questions are A) how do you approach down-to-the-studs level remodel projects? 

I can rebuild a sport bike motor from the ground up (I have in the past) but that doesn't mean my time doesn't have a highest and best use. 

So if the plan is to buy and hold, maybe not an issue, but to buy and build/rebuild and they plan on selling is a big issue as you cant get adequate title insurance.  

If you purchase anything in UC, make sure you get the rebuild letter prior to closing. it is the only legal document that says how many units are legal in UC.