Should I move forward on VA appraisal?

[Robyn Bob Smith]

Hey everyone, first post here and trying to decide before tomorrow at 9am whether or not to move forward on our first attempt at a real estate investment. We love the Salt Lake area and it seems like this is in a really good neighborhood. We're at a $262,500 contract price with $5000 in closing costs paid for by the seller. Looking at $1510/mo PITI with $0 down. This obviously doesn't look like a great rental right now but we're hoping to get $1200-$1400 for the upstairs two bedroom/1 bath and live in the basement while we fix it up. Then would like to rent out both levels after the remodel, $1400 upstairs and $1200 for the basement apartment while we look for our second deal. The inspector today seemed doubtful that the V.A. appraiser will approve the loan because the roof needs to be replaced(it's worn and has leaked through near the swamp cooler), and the car port and back porch should probably be torn down. At the very least all the wood needs repainting but it is rotting in more than one place. The previous owner has done a lot of the work himself and we're worried it might have too many future problems and it would be a waste of time to spend $600 on the appraisal if they won't lend on it until there is a new roof and the adjacent structures are torn down. It also sounds like the furnace and hot water heater may need replacing soon, and some of the electric wiring is not up to code. I'm getting a CMA from the realtor tonight but it's estimated to be a $300,000+ neighborhood with a very good appreciation outlook for the next 5+ years with plenty of new jobs and steady population growth and not a whole lot of new construction. We're very new to this so please take it easy on us but any advice would be welcome. What would you do in our shoes? 1122 E Sego Lily Dr