While I do not personally have a contact in KC, I'd recommend using BiggerPockets' Find an Agent tool.Its a FREE service for BP members like yourself who are looking to expand your network and find local experts.Here, you'll be connected with an investor-friendly with knowledge/experience in your desired location(s). 

Finding the right team to assist you in your journey is what is most important, that way you have guidance, experience, and a partner that is looking out for your success in your investment. 

Your unfortunate experience is summed up in the word ‘trust’.

As far as down payment, investment properties typically require a minimum of 20-25% depending on property type, FICO, level of experience, occupancy %, etc.

I am hearing you when you say you had the builder fix the grading issue, but grading is in my experience the #1 cause of repeated water in the basement.

Could you please share your experience of how you go through these obstacles and how do you choose your state and properties to invest in (if you are investing in tax deeds as well)? 

Initial budget $250-600k +- Please advice if it's seems like an ok plan in your opinion (preferably if you have personal experience). 

I appreciate all the insight and for the most part I do agree with you all on this being the typical experience with STR's.

You can of course do it yourself, but I think hiring expertise who has lots of experience talking to the appraisers, working for other investors, and potentially going in front of the board and potentially arbitrators is probably money well spent.

Hard Rock Hotel (Downtown San Diego) has offered investment ownership opportunities for certain rooms within their establishment... has anybody had experience with this or horror stories of such investments?