This will need a lot of work and improvements to get it back up to standard, but it's not impossible. 

. - Annualized ROIFor Rentals that we hold in our portfolio, that were perhaps once BRRRRs, I analyze based on ROE - Return on EquityI used this equation to back into my maximum allowable offer (MAO): ARV - Rehab Costs - Holding Costs - Purchase & Sale Costs - Desired Profit as a percentage of ARV = MAO

We also reswizzled a back-to-back bathroom (1.5 baths)/laundry area into a full 2-bath with stackable laundry solution in the hallway.

I am trying to develop a long-term default financing strategy to fall back on before making my first investment, and would be thankful for any feedback which could be given for the one described below. 

@Caio Ferreira Torres Congrats on getting done with your first one, I started back in 2017, and I've house hacked 7 times since then with a W2 making about the same when I first started, so it is totally possible, you need to understand how lender's calculate Debt to Income Ratio, it isn't just adding mortgages to the denominator. 

I did not have my real estate license back when I bought this house in 2007.

Alternatively, what's the best way for my friend to get their funds back without any tax implications (if any) for him and business?

Back on markets, or high days on market.

I built the back office for one who is doing this but you have to involve them early. 

Call previous landlords... including two back (the current landlord may be incentivized to lie to get rid of a bad tenant).