I love long term holds and thats our niche, but at that level of gain I'd probably sell, 1031 and lock in the profit.

The house has serous basement level water damage which is the major part of the rehab and the master bedroom was framed but not finished.

Taking the average of 5 comps is one way to have a decent ARV (not too aggressive and not too conservative), however, your specific market and your level of rehab will dictate if you get the top price or the "average/median" price of the comps.

Typically there are levels of zoning due to density and block construction type all in a city general plan.

My guess is it was determined that nothing in the immediate area was a good comp due to age and finish level, so the appraiser ventured farther out for comps. 

Note this is the appreciation level of my worse property that was worth ~20% of today's values. 

The best skip traces produces data at the credit bureau level.

Land owner got suspicious when top level water tank was built on 10th floor.

I'm suggesting you avoid Fortune Builders $25k level, but local boot camps by your REiA maybe $499, even $999. 

That being said, I am sure that building from the ground up is another level and I am setting myself for lots of headaches but hey, I gotta learn somehow.