I currently live in Toronto, so I don’t believe house hacking would be possible, but I am aware of that strategy  

I still live at home as of right now.

to live in How did you find this deal and how did you negotiate it?

Best part I live in FL, All the best 

she had it rented out (kind of) and because she's living out of town and so much work needs to be done and she can never do it. 

Hello biggerpockets,I am trying to understand all the potential *legal* issues I can run into by trying to split a regular single family home that is zoned as such into essentially a duplex with 2 separate tenants, one living in the house and the other in the basement.

The advantage you have living in SD for 15 years is knowing neighborhoods,which ones are improving, where you will like to live, and which will attract good tenants. 

I would focus on finding a solid property in a solid location with tenants you don’t mind living with, force some appreciation through repairs or something like that, let time do its thing and then scale up if you want to.  

We received the Judgment against the tenants who continue to live rent free in the property.

You should be able to live a couple months on a credit card or have a paid off car you can sell.