I will need to pay off the existing mortgage ($451k) with a construction loan; at most I can put in $180k toward the build but not sure if that is wise to put so much of my own money in.So far my best option seems to be to partner up with an experienced developer/builder who can put down cash towards the construction downpayment *and* qualify for a bank construction loan.

That is the major problem in developing a relationship with tenants.........They never have the same expectations as the landlord.

@Dean Ingraham,I own 3 quads in a similar development. 

This prospect, though small, does excite me, since it can be my first baby step in real estate.In Brandon Turner's book about no money down real estate investing, this strategy is not covered.

Medical tenants have heavy TI when they go in so if building is really outdated and old they may leave to a new building completed by a developer with all the new bells and whistles unless you just have the best spot in town already. 

And I feel that Memphis would make for a great prospect.

With the time it would take to develop this, I can justify the extra expense it’s just hard to pull the trigger on it.

If you own the land you don't ever have to develop it if you don't want to. 

I have no idea how to find developers that would build luxurious homes in a community like this, and wonder if they'd bend over backwards to pay for Backtaxes, Closing Costs, a wholesalers' assignment fee, and close within 2 months!

Keep looking, inspecting and prospecting--the deal of the year/lifetime often comes along every month!