I was leaning towards building simply because I wanted to 'max out' what the insurance company would give.

While researching the property, sales records and owner info, I discovered the seller also owns the house next door to the one I'm interested.This is when I had a thought.How can I get in touch with the owner to negotiate a package deal for both houses at a discounted price?

You're going to need to do something to create more value in the property if you want to pull out more following your original 25% down... which could come simply from 3-4 years of waiting on appreciation.  

This is what makes this very tough for a homeowner to buy something to live in. as they get lazer focused and it never goes to sale. they waste time and energy chasing it.And if its LA if there is any equity at all you will have massive competition..For due diligence simply order a preliminary title report for a few hundred and that will tell you the story.. some auction sites will publish the TSG  but not all.good luck

If you think you will go FHA and then Quit Claim the property, to a LLC you run the risk of the lender discovering a Title Transfer occurred and activating the "Acceleration Clause" or "Due on Sale Clause" that requires the loan to be paid in full, within 'x' number of days.

This is simply reporting, doesn't get you in trouble, doesn't trigger audits, just gives the IRS a flag.

Imo Inglewood will probably have double the appreciation long run simply due to lack of available land.Good luck!

What if the company simply goes out of business or closes down?

Will all delinquent property over 4-5 years old all be simply vacant land?

I wish I had never discovered that.Some (most?