I've heard closing a foreclosure normally takes 3-6 weeks after you've won the bid - any insight into closing times would be helpful as that alone may eliminate this optionOption 2: Perform a light rehab and flip the house.

House hacking eliminates 1600 dollars worth of rent and leaves us with a $ -955 cash flow. 

If the building will be occupied during the process that will eliminate a lot of companies.  

They usually have a "buy box" in terms of location, projected returns, split requirements, condition of the property, exit strategy etc. to eliminate as much emotion from the equation as possible.

We eliminated the upstairs because the ceilings were under 7' and couldn't be used as heated sqft, rearranged the floor plan, went through the permitting process and learned how all the trades worked during the process, connected with more contractors, electricians, plumbers, drywall guys, carpenters, investors.

The revisions including eliminating STRs (which aren't permitted by the city ordinance anyway without very specific qualifications/zoning), limiting the total number of rentals in the subdivision to a percentage, etc. 

We want to refi and eliminate her ownership after a yr or so) or should we go with a hard money lender and refi later?

I have read Dave Ramseys TMM; and started snowballing my debt last year; and am almost finished eliminating over $15k in CC’s.

The only reason a builder would partner is to reduce or eliminate the need for capital.  

A new energy-effecient lighting system eliminates excess lighting and it can typically be depreciated separate from the building which is depreciated over 39 years.