You can evict if certain conditions are met.

If your friend's work is limited from her condition that alone might allow her to apply for SSI....which is very stable income.  

Can you rent a property in the current condition for $2500 ? 

This may include, but is not limited to, property type (duplex vs. tri/quadplex vs. commercial), price range (max price), location (zip code), condition (Class A-D) and profitability.Good luck!

The property overall is in very good condition and it is in San Jose, CA.

Not knowing if there are tenants or if it is empty, the condition, if there are any code violations existing, if you are assuming a company name that holds the property and if so, the standing of that entity as well as contingent liabilities, what kind of municipal requirements there could be like registration as a landlord in that jurisdiction, or of any other details, I really can't tell you what you need to do first.

What's the condition of the HVAC?

If you leave the property by the lease expiration date AND leave the property clean and in as good condition as you found it I will not charge rent for Jan. and I will return the security deposit in full" I made the offer contingent on them responding to my message. 

If the house is in bad condition can I receive a 403k loan and use it to help finance a portion of the conversion or would I basically have to use it solely on fixing the structure as a 1 family unit? 

The house needs to be in the condition it was when you did the initial viewing (or better).