I have called my local credit unions and I can't borrow against the house because It has already been gutted and is deemed uninhabitable.

If you're local you can probably do fine on your own.

So we have been going to a local laundromat for laundry.

You probably have good relationships locally so I would first think maybe upgrading to more units (if you like landlording and management) by selling the duds and then consider what you want to get into.

Ensure the sublease is explicitly permitted in a written agreement with your friend and aligns with local STR laws.

If you're not having any luck with mortgage brokers (I'd search out the ones who specialize in investments), then go to your local REI meeting. 

I completed an internship in commercial real estate, and I also attended a couple of local REIA meetings/networking events before moving to Northern VA.I was able to narrow down potential strategies, and I figured both BRRR as well as wholesaling don't seem to be the best strategies for me.

How are values changing compared to the rest of the local market? 

I'm local here in Houston and happy to help with any recommendations needing along your way! 

In Pittsburgh, where I live and operate, this would be a two to three-month process in front of almost all out local district magistrates.