It took a few months, but it got completed as an excellent rehab to rental and has been steadily rented.

If it doesn't look like it is going to work then you can try to convert it to a LTR to cover the carrying costs or sell it.All that being said since you're on this site and asking good questions I'm assuming you are saving a good amount of money now and have excellent credit.

Good news?

The good news is that if someone has a record and is going to be a problem in the present their credit and/or income to rent ratio probably isn't going to be great either.

@Wyatt Franta, Just noticed one small changed needed in your excellent post. 

Here it is...the year is 2007We are produce farmers FIL sells farm-we have basically zeroHusband under-educated /only job he ever had (46 yo)I took our lives into my own handsTraveled upstate (NY) Bought a house for cash WITHOUT TELLING HIM (425K)Ummmm-where the F am I getting that moneyWent to local mall with my 3 girls-called him from my flip phone to break the news- he fell silent BTWDrove back home (near NYC)Sold my house for 500k to a mansion owner close by (look up GLENMERE MANSION)Got my RE licenseFound my husband a job-he obvi couldn’t use a computer We are still in that houseWe’ve only lived in 2 houses I now buy houses regularly WITHOUT TELLING MY HUSBAND Because that sh*t is funny.

The good news is that you have an established tenant, with a proven record of profitability, and tons of equity. 

And i was currently waiting to hear back from the city about just that...but i also found out from a lender that supposedly i cant get a construction loan for a multi family unit which is news to me...so i guess i have to look for a plan b which is single family home

Can somebody who is not self employed, has a lot of equity, excellent credit, no debt and 30 thousand in savings but can only prove very little income because the majority of their income comes from tips, do a cash out refinance?

@Kade Eiguren excellent!