I have the same issue.

The two main issue with the property are large cracks in the brick basement walls and foundation issues both from settling.

The problem you would face, if you mortgage in order to invest in the stock market is that you'd be paying approximately 4% on any loan in order to invest in the market which, on the whole, has a yield distribution of less than that (e.g. the S&P 500 yield (check out SPY) yields about 2%.  

Rich, it was full but the city inspector had a small issue with the sewage and the the tenants had to leave within 60 days since the owner did not want to fix it. 

Appraisal came back "as is" and issue free, documenting the room as "[the room] was once a bath room.

. $804.03 PITI $41.67 Sewer bill $146.50 Property Management (self) $146.50 Cap Ex $73.25 Vacancy Rate+$58.60 Utility/Misc$1,270.55- NOI-$1,465- monthly rent$194.45 Net Profit Income per month x 12 months = $2,333.40 Annual Net Profit IncomeTotal Deal Appreciation: $14,000- (38.25%) ARV was $101,000 Depreciation: $2,345.45- (6.3%) Amortization: $984.58- (2.68%) 1st year loan pay down Cash Flow: $2,333.40- (6.64%)*Property Management: $1,758- (5%) I self managehad script issues with bp website, could not rotate pics.     

My issue is that I cant find properties in my area that are affordable and my 40k is not going to be enough for down payment etc.

You may consider putting some sort of put/call options into the partnership agreement to prevent any issues from arising should you differ on strategy down the road.

I am a new investor and these are some of the issues that I have contemplated as I develop my overall plan. 

The issue pertains to properties that you acquire and then sell.