This was caused from a drainage issue that was addressed only a few years ago, but the damage from years of water is done.

I had originally hired a general contractor to do the work on a rehab.

Estimated rehab is $175,000.I was able to negotiate the price down to $230,000 and the ARV is $600,000, so luckily, there's a lot of meat on the bone.At one end of the house, there's a big leak in the roof and that wall seemed to be sagging as the door in that wall was jammed shut. 

So we purchased for 130k with 5k seller credit, 27k rehab, and appraised for 175k.

I don't know what your past construction experience is (or if you're handy at all) but if it's minimal, then I would stick to rehabs first (doing cosmetic renos, then more complicated as you aquire and rehab) then go into new construction. 

Hopefully the owner and address are listed in title.

We buy fixer uppers and rehab them and resale.

It’s been totally rehabbed but it’s in a frame 2 flat.

For rehabs smaller is better until you are ready to take down the big deals.

Youll start rehab and work out the details of the escrow and getting the 30k out.