Once you have clearance docs in hand you can move forward with build back.

I was born and raised in SF and although I do see these areas changing quickly, I don't believe it will be quick enough for you to feel safe.It sounds to me like you are not scared of getting your hands a little dirty and doing cosmetic remodels.

Be advised, these auctions in most counties are very competitive and attended by at least a hand full of pros who do this for a living.

I ended up purchasing a bank owned SFH for ~50% ARV with cash, from family loans at 12% & 0 pts, rehabbed it, refinanced it into a 30 yr loan and walked out of closing with ~$8k in hand - all within 60 days.

A "known" bird in the hand is way better than going hunting.....  

This killed me because I was really looking for a fixer upper, but my hand was forced due to the time restraints.

Plus you will see first hand what it takes and get to learn the process.

I agree with some of the others, you may want to look into Turnkey as that would be very hands off for you. 

3) Should we even create the entity before purchasing, or do we purchase the property ourselves and transfer something (title, idk) into the entity?

You should know exactly what you're agreeing to when they ask you to sign their one page assignment contract.Fourth, Most deposits to wholesalers are non refundable so make sure all of your questions are answered before handing over a check, preferably over email so it's documented.Fifth, Do not stop your diligence until you close.