I am now leaning towards a new build in hopes of securing a deal. 

Maybe try getting a secured LOC?

He used up all his security deposit and made us reduce his rent by 150$.

Can a former tenant sue YOU for wrongful eviction or offset of security deposit? 

The bottom line sounds like a highly qualified investor should be able to secure a loan.

With your income you should be able to do all of the above anyways so congrats on the success so far.I appreciate your reply - only debt I have is a $350 a month car payment, I will most likely keep the home for another year or two then turn it into a rental for 3 years and then sell before the capital gains monkey catches me (2 out of 5 years  I think) So it would make sense I think My emergency fund is solid as my rent is covered mostly by roommates and having 60k just sitting in a .5% interest account is secure enough to last me 3-6 months (truth be told 20-30k is more than enough, I live really low) 

Once you feel secured in that, I would encourage you to start going to different areas, walk through open houses and seeing the homes gives you an interesting perspective for what to expect and then you can engage with agent and lenders to find out the right fit for you.

I wasn't sure what to do because the replacement of it might cost more than my security deposit.

I would either collect first and last month's rent, extra security deposit, something to mitigate the risk of a marginal applicant like that as well. 

There are hotels now that offer kitchens, clean towels, housekeeping, security, front desk, concierge services all much cheaper than a dingy ABB where the owner is cutting corners to keep up his rental payments and ABB fees.