I would just like to know the ethical and legal way of handling this situation before I start throwing out offers.Any help on this would be great!

As soon as you can, begin throwing your dollars into marketing.

And just something else I'm going to throw out there, does your boyfriend stand behind you?

Another thing in this current transaction that throws a wrench into things is the owner financing component.

Yes, they could be great tenants, but the short sale on their house coupled with the current landlord bashing throws up red flags.

This is because it gets a wider audience, and you get the potential of contractor/flippers, contractor/owner-occupants, and owner-occ buyers that are willing to do the work slowly over time.  

For market rents I like to use a combination of calling local rental agencies, throwing the address on rentometer, zillow, and lastly......craigslist for the low end of the range.  

Even if I did have the time and resources, I am not convinced throwing more time and effort in to managing a collaborative solution would have  much effect. 

I might differ from the others, however I'd think a HELOC would be the way to go - little fees, and this allows you to use your house as an ATM if you need to act quickly (use cash) to purchase a property, then later if you are holding the property you can go back and get more permanent financing.If you do a cash out refi on your house, you've probably just increased your house payment again and are locking yourself into mortgage payments again for however long your new mortgage is, plus all of the fees/taxes (mortgage registration tax, loan recording fees, fee for this, fee for that etc)Maybe I'm a bit more conservative - but probably would make your life a bit easier if you have your house paid off and you are able to throw more of your cash into your RE business later on.  

I've been told that a lot of contractors don't like to work with a 203k loan due to the paperwork the FHA throws at them.