While I regret not having secured the deal prior to the refinance, I still believe it is a good deal, and would like to work something out. 

I only say this as I'v seen a seller sue the buyer for non performance of the purchase contract!

That would outline the terms of the lease - rent, security deposit, property condition at move in, lease end date, lease term and anything else that a lease should cover.

Not performing what a subpoena states could land them in jail for contempt of court.Disclosure:  I'm not an attorney, not giving legal advice. 

Do you currently have enough funds to pay first month’s rent, last month’s rent, and a security deposit?

I’d sell it and reinvest the profit in a better performing property.

He likes the security of the job and you like the thrill of the flip. 

Typically when I get done with a project they perform much higher due to my added income. 

Definitely will look to keep it as a rental for a year or so, but  would it be more advantageous to leverage the house (cash-out refi)  to secure a new deal (more units) opposed to selling and then 1031 ? 

This is what it sounds like you're trying to do, and you will likely need a securities lawyer to draft the Private Placement Memorandum (PPM).