This would allow good financing via FHA (I think 3% or so down and a lender can chime in here) and great rates to boot.

What are some of the biggest risks or obstacles that come with new construction?

This is the biggest thing why investors fail and you have already overcome this obstacle for your next deal.

I was willing to offer 850x 48 months And pay the back taxes and also give Nelo something .What do you think I should do and what can Nelo do in her situation ? 

I was going to chime in here, but I'd say that @Coleman Nelson already hit the high level points quite well.I just commented on another post Turn Key Properties Under $40K with a couple short examples of single family properties and their related numbers in Dayton, OH if you're interested.And yes, here in fly-over country, the cost of living in general is very low compared to other markets mentioned by other posters.

This woman calls me back and immediately is defensive telling me this person I had spoken with was in her office (and was "just" a junior loan officer) and this gentleman did have a loan (in his companies name) and they did an appraisal and it did not appraise so they denied him.

What Sellers legitimately fear is a Buyer coming back to them for all kinds of "misrepresentations" that are really just small oversights or errors inherent in operating an apartment complex. 

What she should have done is put the money in her business account.

Don't get me wrong; There are plenty of knowledgable good-hearted folks in here, but what's acceptable to you in terms of living standards and the tradeoffs you may have to make can only be determined by you.

Welcome to investing in Indianapolis; glad to hear you chose to finally pull the trigger on your first property, as this is always the most difficult obstacle to overcome.