But I think the plan you outlined makes a lot of sense.

Does your lease outline a penalty if they were caught with unauthorized pets? 

If you have any helpful advise on investing out of state or have an outline on the process of getting my first rental property (i.e. get preapproved -> find home -> send inspector -> make offer?

Should I start an LLC or just have a lawyer draw up a contract outlining each persons involved expectations ?

You definitely have a great plan outlined in your intro!

I might have a few people interested in private funding but as long as I have the right documents outlined and a plan, what else is needed?

I am making a broad assumption that there wasn't a formal contract with scope of work outlined, that was then modified and re-signed as changes occurred.  

Essentially, you can fund the loan with repairs still to be completed, and an FHA approved contractor has up to 6 months to complete the renovations outlined in the appraisal.

Personally, I would take a contract off a wholesaler without my lawyer didn't draft/review it.The easiest way for you to wholesale it is to put in under NOI (the verbiage of "and/or assignee" is common in these documents) which will outline the general terms and then you can hand it off to a buyer that will take the negotiations from there. 

Geoff outlined the framework that will allow you to calculate your NOI.