What we didn’t know going in was that the previous owner was 1 week away from a court date with the town over all the board of health violations related to the illegal apartment.

That is actually a good thing, otherwise the area would be over run with boarded up houses.

I'd go daily and make sure the house is secure, board up the window from outside daily if needed.

He'd have to demo the sheetrock, put up water proof cement board, and install about 140 sqft of 12x24 tile and frame out 2 stainless steel wall niches.

Is it 100% above board?

I call all this wholesaling as the gurus teach it, a runaway freight train and the whole circus is on board, monkeys, clowns and all. 

Usually there is a bulletin board or list with the office of people waiting on spaces.  

They will also use; Bigger Pockets marketplace, Craig's list, Facebook, investor meetings, meetup group mailing lists or online message boards etc. 

I'm installing some darker flooring and the current base board does not match with it very well.

You can get some pretty nice all wood (no particle board) cabinets there; they usually have 3 or 4 styles in stock pre-assembled, and they also have 6-8 more choices that you can order that usually come RTA and they will assemble them for you if you wish, for a small fee.