You could invest it with another hard money lender (not a solicitation, I don't take investors) Or you could lend it to one rehabber for downpayment and working capital on a partnership basis.Becoming a hard money lender requires knowledge of real estate investing, knowledge of lending laws and regulations, and much more capital than that. 

Or is this something that can be done with an existing LLC? 

Who believes that POS rules and regulations are unconstitutional and believes that the ruling should be applied to the suburbs of Cleveland?

They depend on the actual demand that exist. 

Instead of buying fee simple, you're buying sub2 existing liens. 

You may get better tenant retention if: (1) the tenants are paying utilities; and (2) the existing windows are so old that it barely insulates.

Any local regulations I need to be aware of?

If there's an existing lease, it's binding.

The city already has a strict permitting system in place for Vacation rentals, and it is quite possible they will further attempt to regulate vacation rentals. 

If you can buy an existing duplex for $100k, but it will cost $200k  to buy the lot and build a duplex, then it makes no sense to build a new one and therefore the lot is worth very little.