I live in NYC myself and I strongly suggest people from here to start investing out of state but somewhere close by so you don't have to rel completely on other people and if anything goes wrong can drive to the property and take matters into your own hands.

And Aaron, definitely correct in that this area is a completely different type of heat, ha. 

Over the last 5 years we (@Sam Wilson and I) have developed a pretty cool and detailed system for tracking preforeclosures in Tennessee - primarily in Memphis and surrounding counties (but could easily be expanded to any other county or city).  

Any referrals to a lawyer if needed to complete the eviction?

Dave, I completely agree with @Tom Ott.

I expect to complete rehab within 8 weeks and we add 3 months for sales/closing process.

They usually have to completely restructure the loan each time. 

If the builder is willing keep the project in his name while constructing then indeed when you sell you can execute a 1031 exchange and buy the new property when it is complete or when the value of it is enough to cover your exchange but within the 180 day limit.You just can't take title to the new property until the old property sells in order to complete the exchange.

Is the contractor paid after work is completed?

@Michael Plante, Thanks for the suggestion.