Have the seller obtain the proper certificate of occupancy, or else be prepared to walk from the deal.If you close on it, you will have a single family with an illegal extra apartment. 

I could say some things, but I've never done development or learned a lot about it, so I'm not comfortable offering advice there. 

But what is the smartest thing to do with the extra cash?

Given they need to move out and I need to sell, I have some extra time.

what is going on is that it will be sold at a sheriff's sale. the bank may be listing it to try to get their money back, plus some extra. is the market value $110k?

I WAS THINKING THE BRRRR PLAN BUT IF NOT USING THAT HOW DOES SOMEONE GO ABOUT ACQUIRING THE SECOND HOME IF THERE IS A MORTGAGE ON THE FIRST HOME WITHOUT REFINANCING FOR THE EXTRA MONEY FOR THE SECOND HOME.

You already have experience in the other stuff...taking down and managing a deal.I also recommend telling yourself a different story than "I don't have cash or financing"...there is all kinds of money looking for deals.one more thing, allocating money from others require good networking, marketing skills which i need to develop in the time being, besides in my current area which i already invested in, there is over-supply.

Making sense of the deal and understanding their track record is important, of course, but I believe you should develop trust BEFORE you ever invest.  

Still I agree, no reason to cave on this or anything.Vaping leaves the resulting oil behind in which case can develop into what’s called “ popcorn lung”  in a person from it being trapped in their lungs . that residue in the air is sticky and gets all over the place and of coarse the hazards of a potential  fire .

But after seeing nothing but a hand drawn sketch and some questioning of the "builder" it was clear he would be in way over his head.Building is never a cut and dried thing, so trying to get reimbursed for your extra expenses is unlikely.