He goes back and says it looks like the basement window has been kicked in but he could not tell for sure (it has a set of security bars in front of it).

In many states there is a yearly filing fee.

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 would have the seller do their part and file the paperwork and then buy it.

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.

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

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

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). 

If you were not receiving rent it seems odd you would not be asking the PM to file for eviction.