I have a tenant that is currently running up their water bill to an absurd degree (Hot water is something I am responsible for).

Isnt hot water electric?

This will require waterproofing the basement, moving some piping, adding a doorway, moving heating and water heater.

Taxes, Insurance, water/sewer will be $10k.

My mortgage, utilities (shared), maintenance reserves, and water would be $1,000 per month. 

A HELOC on your residence can be a useful tool in real estate but I would certainly be cautious about using that up since that is what could keep your head above water in a financial crisis in either your personal or REI lives.Play out some "what if" scenarios. ie, What if someone loses their job?

I've read before on here about having a plumber come out to do a pressure test on the water/gas lines and electricians bringing out generators to test electrical.

@Dakota Evans no hoa or water fees?

A tenant recently let me know that they observed an oddly high water bill. 

@Ernes Sahic while you can certainly get lists surrounding pre-forclosures, short sales, probate, Evictions, Loan Mods, Tax Sales, Divorces, Hospital Liens, Code Violations, Appointment of Substitute Trustee, mechanics liens....I mean you can even get a list of people who had their water shut off....but I don't think there's any service out there that will provide a list based on if the property is a 2-4 unit property.