I am still trying to figure out an appropriate way to manage these two properties.  

They have a job to do and the first set of contractors should have known better (or more likely they didn't care) and got the appropriate permits.

Now that you are aware of this issue, among other things depending on the location, you may be required to give appropriate notice or the "lien" may survive your foreclosure.

It all depends on your state landlord tenant regulations as to the appropriate procedure to collect.

However, the mortgage/note and/or deed of trust with mortgaging info should be available at the appropriate county recorders office.If it is not there and is therefore not recorded, I would pass on this house:  the person trying to sell it to you may not be the actual owner.

That said, I have done my best to mitigate as much risk as possible as an out of state, first time investor by taking my time in learning about REI, learning how to run the numbers and budget appropriately, as well as developing reliable connections.

For ex lot of people see ARM s as bad , and for right reasons , but if you know you will only hold it fr one year , then that is appropriate .Now my main advice / observation : with any type of professional , mortgage , realtor , attorney - only 10% of them will be good .

Quickbooks is not appropriate because it doesn't track everything.

@Jamie Adames It is a good idea for the peace and clarity; private lender; wires the fund for real estate transaction to the title company handling the transaction.It is recommendated that private lender gets the Lender title policy issued by the title company.Also, you may have to keep insurance for the property and have the lender as loss payee.Take help of attorney and/or title company as appropriate further.

It might be more appropriate to say Richmond as it's where I intend to work.