However, in your market which has a median sale price 2.5x mine, your $10k might not get you very far unless you pursue creative financing.

But to pursue that, I need to document everything, testify before a judge, provide evidence, then hope and pray the judge rules my way and not the tenant's way.

If you're going to use it to generate leads for your "investing club" I'm going to put the dangers and risks close by so at least the small investor you're pursuing for these ventures knows there is more here than meets the eye. 

Given the possibility of collecting was very low - I took the same approach as you, throwing good money after bad wasn't worth pursuing, so I sold at a big loss and chalked this one up as a big learning experience. 

I don't know if this is worth pursuing but I feel like they've really dropped the ball over and over.

@Diego A.Whether or not you should pursue a partnership or syndication depends on the preferences of those involved.

If they don't allow it, then you would have to pursue a variance for allowed use, which could be a timely process. 

They have plenty of equity in this primary residence and do not want to pursue a heloc or REFI due to credit issues.

in hopefully launch into a real estate sector I would like to pursue, learn more about and purchase, etc. 

If it's something you want to pursue after that my company does provide consulting services to help guide people through the process.