What do you guys think? What are my next steps?

[Account Closed]

I looked at my first rental property today, it was 2 Duplexes(4 units) on one parcel, 100% occupied, all on month-to-month leases. Area is mostly multi family homes, especially duplexes Before I explain any further, here are the numbers:

List price: $87,500

Tax Value $113,000

Rent per unit: $400

Gross Monthly Rent: $1600

Annual Taxes: $1370

Annual Insurance: $1100

He agreed(verbally) that he would let me buy it for $80,000 cash. I would get the cash from a loan from my grandfather with zero down and 5.2% interest for 30 years amort. Comparable duplexes are selling for 30-40K but are in need of a good amount of work. As for the subject property, the owner had bought it and renovated 3 of the units(the 4th units tenant has been there for 12 years, didn't want his unit renovated) however, after looking at the property I can see that there are a few things that need to be done but overall this seems like the best deal anywhere close to me. Assuming the tenant in the un renovated unit stays which is likely, I estimate just a few thousand in repairs and most of those are cosmetic, of course the inspection might show otherwise. 

While I was viewing, I noticed one of the closets had a fowl smell in it, but neither me, the owner, or tenant could tell what it was. Another tenant was complaining because their front door was not properly sealed, and cold air was rushing in, but I assume this is probably an easy fix. The thing I'm most worried about was in the 12 year tenants unit(who was not home at the time of viewing), it was the only unit un-renovated, the smell of cigarette smoke was strong and there were black steaks on the paneling of the walls in the living room. They are small units so I was thinking maybe it was just the smoking in a small space for such a long time.

The seller would like to do a 10 day due diligence period, and wants to close by March 20th. At this point, everything is verbal, I told him to let me think about it for a day or two before signing anything. I was a little overwhelmed since it was my first showing and really don't want to miss anything. I do not have a real estate agent and would rather not pay one if possible, as I don't think the seller would consider paying the agent and I pretty certain I can handle it on my own. He did seem very open about the property, didn't seem like he was trying to hide anything. 

-What do you guys think about this non-refundable due diligence fee, is this standard? I would hate to pay this and the property turn out to be a total disaster during due diligence and not get that money back. 

-What would be my next steps assuming I would like to pursue this property? I know you submit an offer to purchase, you have a due diligence period where you get inspections and an appraisal, and you need title insurance, and a real estate attorney, which order do these occur in?

-What documents should I get from the seller before beginning due diligence? I have heard on here about making sure to include in the contract that the due diligence period will start upon receipt of required information so the seller can't waste your DD time. 

-Am I missing anything in this situation, or i there anything I should be alarmed about? 

Sorry this is so long, I just want to make sure I cover everything. Answers to any or all question are much appreciated!