Credit card debt is around $4k and we have one car payed off and one with about $10K remaining on the loan.We make enough to make the minimum payments on everything and have maybe an additional $1.5K a month.A lot of the suggestions in the student loan posts were to move into a duplex and rent the other side out.

However, the agent said that it can be legally a 4 unit home, with an additional unit in the basement.

When you hold a {rental} property in a corporation, income is taxed at the highest corporate tax rate - which increases the benefit of claiming the CCA deduction each year and mitigates the punitive aspects of the recapture.In addition to how you hold property, the length of the hold will also factor into whether you claim the CCA deduction; claim the deduction for a few years than stop; or do not bother to claim the deduction at all.  

(You will get deals at steep discounts..

In your example an additional 83k in cash on top of the down payment.

@Randy Charboneau is also a great source for discounted investment properties.   

Show proof of funds for the purchase price, rehab cost, and additional funds for overages.

My current plan is:(a) Finish the rehab, increase value of the house(b) Tap into the equity from (a) to help finance the addition of a legal unit in the garage(c) Tap into the equity from (b) to help finance more real estate investmentsNot sure exactly what (c) will be.

You can get some rent information from the MLS via a real estate agent, in addition to the above sources.  

In addition to the book you've read, you may want to check out the Book on Managing Rental Properties, it may help you determine the right policies and procedures to turn that property around.