It looks like it might need to be redone, but the contractor assured us he'll just take a grinder to it and it will "look good" at the end. 

We would like our home year three to be FHA as well.

We've recently come across what seems like a great investment property:- Tenant Occupied, paying FMR- Slab home that we will eventually remodel ourselves after the current tenants leave. - Only 4 houses down from my current home in metro Detroit, MI.We toured the property and it was a hot mess, easily a complete remodel because of cigarette smoke damage that seems to have reached every corner, but the prospect of redoing it really excites us.

I would connect with @Taz Zettergren on Dallas as well as OKC, Memphis, Arkansas or Alabama.  

Start by drafting a written agreement that includes all the terms, like the price, interest, and payment schedule.

Unless the lock was faulty, I would likely charge the tenant.

Apparently there are some cities in LA County like Santa Monica and Inglewood which do not allow this.How do you check which cities allow/disallow SB 567 "just cause" eviction through "substantial remodels?"

I’m a longtime investor and Realtor from the DC metro area as well-  BP is a terrific resource to help you grow both your investment portfolio and better support your investor clients!

Hope you are able to learn a lot on this forum like I have!

It can work in very limited situations like this one, where you are just trying to remove yourself from title, but there is absolutely no reason to do so instead of a special warranty deed.