I would rent or sell that condo and buy a duplex in a class A or B location in KC.

I can say from having taught classes on these loans that your contractor will be the biggest key to your success.

How do you continue  guaranteeing a rate of return or redemptions when the asset class is real estate which is not liquid?

.- After closing, you can do some of the work yourself to save money, but the program doesn't allow you to pay yourself.You will want to buy a Class B property, maybe Class C+, in an area that seems to be improving.

From mold to people picking at it, caulk will need touched up at least once per year.

Some of the materials we choose and asked him to pick up (such as flooring) he replaced with low quality materials, I assume to keep more of our money for himself. 

Because, the lender is entitled to know what risk they are taking with their money.That being said, on seller financing, if someone gets sued and loses, the lien/judgement can be filed at the county, (it's not automatic, someone has to prepare and send the paperwork) which the bureaus will pick it up on producing a credit report.

My permits are ready for pick up and it’s been 13 months since giving 5 percent deposit.

If you are not coming in cash and you plan to hold for five or more years, its the best time to pick up a property at a steep discount and make it work until the cycle turns again.  

Most current foreclosure starts today, do not end up going to saleWhile not an exact correlation, housing foreclosures vs foreclosures starts, the few foreclosures that complete under the present circumstances, makes it very slim pickings in the foreclosure space.