While I sympathize with the situation, I also know that there is a fine line between gentrification and progress.

Should look fine.  

West Springfield is fine, and Chicopee is fine, but you really have to know your neighborhoods and what you are doing in Holyoke and Springfield. 

I know generally people like to stay away from "structural" issues (while some investors are perfectly fine with fixing these), but I am looking for more specific answers.

I've read that I should be fine it capital gains because its been more than 2 years for me, but how bad will it be for my brother and Brendan?

Giving a bit on some terms in exchange for value is fine, but I'm having trouble seeing where the value to you is in this...

I have lived in several 3rd world countries that looked like a fine kingdom by comparison.

Your recourse would be to have some wording in the lease that states all fines and fees(water bill) will be considered rent and all funds received will be applied to them before the monthly rent. 

Also if you have enough cash without it then there won't likely be any "seasoning" issues but if you HAD to use that cash you would want it sitting in the bank for a couple months so they don't give you a hard time about odd huge deposits.Also since you said you would live in it to start at least the last plan of taking out a HELOC on the new place right after buying it is totally fine.  

I'm sure there are better options for some out there however it works just fine for me and it's free!