If he doesn't pay, take him to small claims court or just figure protecting your investment was worth another $600.

But we were not expecting pristine conditions from a foreclosure.Oil tanks should not be a killer.  

This will help you figure out the unknowns you mentioned here:"I think any of the 3 options would qualify my wife to contribute to our Solo 401K?

I am thinking about investing in Real Estate a LOT and I am studying the business by listening to all of the podcasts, reading all of the books out there, analyzing at least one deal a day by trying to figure out numbers.

Yes, this would somewhat stress my finances, but figure I would get a mortgage later. 

You make mid 6 figures, thats around 500k a year?

Listen to the podcasts, read the forums, learn the niches and start figuring out which niche fits your strengths.  

What is the best way to figure out the correct market price?

Turn key companies at least the one's I fund do not buy property back and do not sell for others .. they will buy back but they will want to make the same profit... so they need to add in another fresh make ready or rehab.. ( their clients expect it remember its turn key)  the  cost to borrow the money from someone like me or a HML..

I was expecting renovation costs of around $60k and went over budget to $75k when the house initially finished and had to put in another $5k after the inspection.