The house is under priced and I feel with 10-15k I can gain 60-70k in equity in a few months of work.  

If you decide to continue with the FED, let's assume the judge rules in your favor... that ruling is likely because the tenant did not show up for court. 

In this time, I can make repairs to the property and build the equity and use this to buy a 2nd property with a credit line.

Why give the contractor equity in the deal? 

The resale is one of the most important pieces of the whole thing as that is where you recoup all that loan pay down and equity appreciation. 

Look for them to find in favor of the defrauded tenant and eviscerate the predatory landlord.

Thats 1.2 million equity appreciated in 4 years, and most likely will increase further due to Amazon HQ2.

Equity being built up while you are making your mortgage payments and the pool payments, and when the pool payments are done, you can either roll that into that house to further pay it down to have it paid off by the time your son goes to college. 

I have calculated roughly 90k equity after renovations are complete based on comps etc.

If you don't have enough money in your emergency fund, how about taking out a home equity loan on your own home?