Odds are if they had flood insurance they didn't want to do the demo at all and 4 ft may have been appropriate (it usually is unless you have near 4 feet or more of water). 

Yes the podcast was what initially interested me, I should go back and listen to it again.Yes, i suppose step one is to contact some ALFs and discuss what they may need.I am familiar with the market rents in my area for tenants, but any idea on how I might find an appropriate rate for an ALF?

Has your pm appropriately vetted each tenant?

Sure, if you hire others who have the licenses/certifications that you need in whatever area you are in.You'll probably need a licensed architect and/or engineer for the plans, a licensed GC to pull the permits, licensed plumbers/electricians/HVAC contractors to do the mechanical work, licensed testing companies to do the various energy efficiency tests, etc.Hire people who have the appropriate licenses, and you should be good...

In your opinion, what is an appropriate radius to focus on?

It seems appropriate to ask for a concession in return and see what the seller says.I wouldn't recommend seller financing unless the seller was willing to finance all of it.  

Gas and sewer lines have been capped appropriately. 

This also assumes there is no need to engage in an "Improvement Exchange" because of the rehabilitation costs.

I based the $1600 number on some current leases available on HAR, but $1400-1500 might be more appropriate for the type of deal I'm looking at. 

Will appropriate clauses in the contract also protect against a cloud on the title?