Speaking broadly, I think the best investment strategy involves finding properties that aren't fully utilizing their income potential.At a more sophisticated level, that might mean buying a fourplex of large two-bedrooms, making relocation agreements with the tenants, remodeling the units into three-bedrooms, and then renting them out at market rents.

so they 'hear' a neighborhood is good, and then they 'hear' a property is OK, and they think they can rely on what they heard. 

Simple, close and then put on a few shingles if that's all that's needed, then get insurance.

If the appraiser appraises property as though the unit is legal then the lender will use the income from either unit.  

Has anyone offered all cash then immediately refinanced to get the cash out? 

Then refi out 

Even with only $1000 in rent I’m still over a 1 to 1 ratio (was not taking out a lot of equity) but under a 1.25 ratio. get a valid lease in place then refi ?

Supervise them to ensure they stay good, and have policies and procedures in place to nip problems in the bud before they grow into something bigger.If you travel a lot, or don't have a lot of knowledge/experience/time, then you should hire a property manager.

BiggerPockets has a section just for this, Under the BUILD YOUR TEAM tab- then select- MEET UPhttps://www.biggerpockets.com/forums/521This will help you see the opportunities in your own back yard and here from your LOCAL experts. 

The goal is to have that done in the next 2-3 months and then start on rebuilding but not just a home on the now vacant lot, but a duplex.