I know I will need to get some legal advice, but I am really looking for some input on where I should even start. 

If the seller is trying to avoid legal issues with the city for illegally operating a property I would get out of that.

If a landlord needs to enter a property for an inspection or repair, a two-day notice is required.Our Governor passed anti-squatting legislation a few months ago which allows owners to have the police remove them as opposed to before where it was considered a legal issue for attorney's to deal with.

First, the tenants signed a legally binding contract and do not just get to walk away on a whim.

That will dramatically change the nature of the wholesaling business with the legal compliance factor that agents need to comply with.

One block may be legal, the next block may not be.

You can do a subject to transaction but that is not legally assuming the loan.the banks got rid of assumable mortgage long time ago. 

Purchase price: $330,000 Cash invested: $15,000 Legal 3 Flat (that was not for sure in the beginning).

So if lots of parking, ideally walking distance to busses or transportation to cut down on cars, you might get away with it (legally).Operationally;  this is a can of worms to manage. 

I went to my local credit union, Wells Fargo, and United Bank and each one turned me down after "checking with legal."