Consult with the proper professionals to make sure it's setup properly and look into how you can maximize your tax savings.

You just need to make sure you properly fill out the financing section of the sales contract.

An exterminator is fairly inexpensive to hire and then you wouldn't have these tenants setting traps (correctly or potentially incorrectly) and not address the issue properly.

You can either sell it ‘for sale by owner’ with all proper disclosures, or you can sell it under your broker name with giving the broker any split that may be due.  

Most of the claims were the result of either the examiner not knowing how to properly examine the title  or because the seller and the title agent were owned by the same people and somehow a glaring defect was "overlooked". 

You have to make sure they are trustworthy, and vet them properly.

You don't know how someone will react if you have to evict them. 

My friend then made a deal with his business partner to lend me the money privately with a 1 year balloon payment so that I could buy time to refinance and get a proper mortgage on the property.

I'd argue the opposite -- if the city was smart they would properly tax those rehabbed neighborhoods.

Like Dillon, its hard to tell what they have done, but the equipment is never going to operate properly as left from the previous company.