@Andrew Hamlett, your first suggestion could work with a proper JV agreement drawn up by an attorney.

I would definitely talk to an LLC attorney to make sure I'm properly covered.

First of all, I am sure there are some key learning opportunities you took away on properly vetting tenants and figuring out the Chicago Landlord-tenant ordinance (i.e, move-in fee).I'd just talk to your tenant first and see if he can be reasonable, then resort to cash for keys.

It seems Illinois is a unique state where you need someone local to help execute the quit claim deeds.

You would only pay him when he has successfully completed a phase of the work satisfactorily, including inspections where applicable.Secondly, if you have a proper contract, it will be easy to just suspend the work, fire him ,and hire another Contactor.

Is the HVAC and water heater broken and functioning properly or is this just due to age?

Unfortunately, I don't have enough capital right now to take it down by myself so I am talking to some investors on a partnership where they bring the cash and credit then I bring the deal, knowledge & skills to execute it, and some sweat equity as my company will handle the construction portion of the project.

Take ownership of your mistake and learn to do the proper due diligence recommended above😊

Additionally, a good broker will make sure someone buying a $1.2MM property is not a tire kicker, and has a preapproval or proper proof of funds. 

I'm looking to execute the Brrrr method around the Newmarket, Ontario and surrounding area where finding any deal under 500k is difficult, along with rehab costs, I certainly do not have the amount needed to close a deal without borrowing additional funds.