You need to be careful with this- in 7 days at the beginning of escrow the seller should have disclosed all- if it was not disclosed and was advertised as such it is an issue- It all depends on what was disclosed and what your friend signed off on.  

Can I advertise a property to potential cash buyers that I don't have under contract yet?

Prospective tenants seem to look only at the advertised price.

If it has been on the market for a long time, this probably means that most of the investors in the area that scour the listings on a daily basis have passed on the deal because the required repairs are probably a lot more than what is advertised.

I would advise to refrain from advertising how much money you have to invest.

Then I heard that we had to either a.) advertise for 'partners' and then segue into just lending or b.) build relationships first.  

What they stated was that if an unlicensed broker ADVERTISES the property that person is brokering real estate regardless if there is a contract or not.

You will need this evidence in court, advertisements, etc.You can wait or begin the court process immediately and apply for what is owed claiming up to the point of the hearing.

Generally I've gotten started talking to either the listing agents for specific properties that are interesting, or the agents who advertise on those listing pages. 

I am beginning a direct mail campaign and will target absentee owners both in state and out of state (non corporate or trust owned).