I wish her well, but I don't want the additional work and risk that comes with a hoarder.

A liability judgment can take not only current assets, but also future assets and income.

I appreciate the additional insight. 

Additionally, I'm planning to commence my real estate investment journey by house hacking and eventually scale up to large multifamily assets. 

Swapping one breaker takes modest time (15 to 30 minutes if no unexpected issues including time to identify the circuit), but swapping additional circuits at the same time requires very little additional time (probably less than 5 minutes each).If AFCI breakers does not meet code, The possible solution could be as simple as installing a GFI on each circuit.  

Now the minimum standards your basement has to hit for it to be able to count as assessed sqft not estimated is a height of 7 ft, a point of egress (bilco doors) and a window usually in the rear, It's one of those things where if your going to go through the process of digging out a basement you might as well go for it and dig it deeper then 7 and closer to 8 ft so you actually stand out compared to the competition.Now the other side of this coin which I would suggest is if you're willing to spend 40-50k on a basement dig, consider adding a 3rd story addition if your a 2 story (think master suite, walk in closet, master bath) or an addition off the back and add a roof deck if your a 3 story (either master suite or just additional bedroom).

Assuming #2, and rental income of $50k/mo (ex. 25 units @ $2000), how much would we reasonably expect to take home (Net rental income not counting taxes)?

Depending on income and credit there are always credit card, personal line of credit and personal loan options available out there

My profile is a 700-credit score, $200k W-2 salary and $5,500 in monthly rental income and limited cash. 

my brokers all told me 10.9-11% for HELOC's and so i called Navy Federal CU and they quoted me at 9% with a $700 fee for the loan, that's really competitive so I went with the CU.Brokers are good at getting a bank account loan, based on existing funds if you don't want them to pull credit/income verification