Hi Ignacio, I am curious how your research panned out or any conclusions you may have?   

@Bryan Cork Did the PenFed HELOC pan out as expected for you?

If it is worth it to demolish the structure and then sell the land it may pan out for you if you have less into it with a demolition price tag to make it valuable. 

Aside from a few minor problems that I can fix easily for less than $100 there were a few problems that I consider to be major issues. 1 The TPR discharge pipe on water heater is PVC and drains directly into the drip pan.2 The electric panel is missing the deadfront cover and one breaker in the electric panel has more than one wire connected.3 A horizontal sliding window has been installed as a vertical single hung window in the bathroom.What do you think I should do?

Tenants cannot flush these down the toilet, because they greatly expand if they are immersed with water.

It's good that the microwave range hood is on an outside wall for venting - that much is good.The room with the toilet - is that just a powder room?

Rehabs typically included new paint, new flooring, repair rotted bathroom subfloors, new toilet, new tub/shower surrounds, new appliances where needed and repainting kitchen cabinets when needed (some of our units had newer cabinets) and new window coverings.   

He said he ran all the sinks, dishwasher, flushed every toilet.  

Are you putting in $125 toilets?

And all bathrooms are out except for one toilet.