Best part I live in FL, All the best 

she had it rented out (kind of) and because she's living out of town and so much work needs to be done and she can never do it. 

Coming at you live from Nashville, TN.

The advantage you have living in SD for 15 years is knowing neighborhoods,which ones are improving, where you will like to live, and which will attract good tenants. 

We received the Judgment against the tenants who continue to live rent free in the property.

Hello biggerpockets,I am trying to understand all the potential *legal* issues I can run into by trying to split a regular single family home that is zoned as such into essentially a duplex with 2 separate tenants, one living in the house and the other in the basement.

I would focus on finding a solid property in a solid location with tenants you don’t mind living with, force some appreciation through repairs or something like that, let time do its thing and then scale up if you want to.  

You should be able to live a couple months on a credit card or have a paid off car you can sell. 

People need places to live and as long as people aren't moving out of the area in large numbers, run the numbers and see if they work for you. 

I have invested my life savings in real estate to earn a living, save for retirement and build wealth for my family.