In my understanding it means that if I won the property the proceeds would cover the liens and the rest would go to the mortgage. 

I will be going forward though, as I have been building my credit since my Cashflow covers my bills.

I'm a first time investor and would like to "house hack," so I can establish residence there and at least cover the mortgage with the other rooms.The real questions that I don't know how to answer are the due to the fact that I'm a 1099 and have been for years.

Your loan for your unit is more than $250,000 (which is the Max your lender will likely require) they could ask you to cover the $50K.

In that case just cut the shower valve area out replace with the one you desire and cover with cement board. 

Your subject Property has several “major” buyer deterants.

I had less than 3 rentals for over 5 years and covered under umbrella insurance, also because I was self managing them and doing have work myself which the LLC won’t really cover against (ie the LLC would be solid but if I personally repair something or do the lease/screening wrong as the property manager they can just sue me directly).

Is it possible to sell the loan to someone else in a sorta subject-to fashion? 

One coat of paint won't hold up for long in our location and may not even cover the paint that's already there.We've been replacing gutters over the past few years, all of which are baked in same color of which the community is already painted. 

Make sure everything is spelled out, cover the details on each scenario, if it all goes well, and if it goes south.