We have sediment filters at both properties and then one has an iron filter and softener as well.

If the property aligns with YOUR goals, then yes, it was the right decision. 

If you are going to charge for your time, you should track your hours and then assign a reasonable.

Then a year later, when I learned they still have over 30 vacant condos, I figured I pick up another one for $40K, but this time the real estate agent said, they're going for $65K now.

Then they'll accept their down payment coming from a 1031 account. 

If the landlord is able to re-rent the unit then the breaching tenant will no longer be responsible for the rent once the new tenant moves in and begins paying rent.

I'm also considering other options such as using a fix-and-flip loan to fund the purchase and rehab, then repaying it using the cash out refinance.

any subsidy of your mortgage that results in less net payment then you would pay in rent is still great. 

Should I be looking for undervalued properties that cashflow out the gate at a 7% interest rate or should I be looking for one's that cashflow at a 5% interest rate and then wait for the rates to drop?

If they violate the lease again in a similar way, then I would give them their notice to quit aka eviction notice and then go to court to evict if needed.