That way you have a pretty solid paper trail if you ever get audited.

I don't want to speculate, what that is, but if you have good credit, a solid down payment and a business plan + a experienced PM they will be happy to fund you.

I understand we will need a GC since it’s almost a full gut rehab but do they help us get plans together or do I get those and then hire? 

Make sure to pay attention to the details and understand the contract.

I've been self managing for years and have got a solid process down for finding the right resident. let me know if you need any further help! 

Also seen the opposite where decent lot, decent price, looked clean, but when I got there must have been $100,000 in cleanup needed with all kind of trash and junk on that lot.I've never been to Harris county auction, but from what I understand they have multiple auctions and maybe even different locations depending on the precinct, so know where to go if you can.At one time there was a lady that would offer orientations at Harris county maybe 1 hour before the auction starts.When you are ready to bid, know how to pay. 

I'm going to slither to the floor now.I understand your pain.

You are off to start interviewing PM's to get a better understanding of what market rents are and if these folks are qualified to rent your property.

I'm keen to understand if there are any factors or considerations that I may be overlooking which could be contributing to the difficulty in finding suitable renters.

Honestly if you are never planning on moving back to the house (or the area), you are not going to cash flow especially after you add in insurance, repairs and maintenance (assuming property taxes are part of your mortgage).You have a friend willing to buy it off market-double check fair market value and sell it to them.My understanding is I would pay zero in Capital Gains because it was my primary residence and I lived there for over 2 years.