It seems to me the NYC location was due to the high quantity of talented work force already in the area.

I think that we have sufficiently addressed that the price is too high for this property and that this one is dead in the water unless the seller will come down about $100K.

Hey Tate, here's what my commercial lender @ US Bank uses for pro forma debt coverage calculations if he doesn't have 2 years and YTD historical data (basically, seller's schedule E's)Vacancy: 10% of gross rents, unless there is sufficient market data at the bank's disposal to justify lower vacancy rates for the type of asset in question, OR detailed historical vacancy data from seller.Management: 3% gross rents or actuals, whichever is higher, with property management agreement provided to close.Cash Reserves: 3% of gross rentsTaxes: Actual data used.Insurance: 3% of gross rents, or as shown by insurance policy.Operating reserve: 20% - 25% depending on the type of asset and amount of historical data provided.

They are self sufficient, but do not pay me.

After we had the final city inspections it was determined that we needed to build a new garage because our fixes were not sufficient.

We are working with the closing's title company - they are reputable and we have an open line of communication with them, and the listing agent, seller's lawyer, and the reputable title company have told us it's clear there are no liens - to make sure we are sufficiently insured in the title insurance, to make sure the title policy has coverage without any of the liens exceptions listed on auction.com:"Most liens are removed after a foreclosure property sale, but certain liens may remain.Here are some examples:Any lien recorded on title prior in time to the foreclosing mortgage.First Mortgage (if the foreclosing mortgage is a second or third mortgage)HOA or COA assessment liens (in certain states)Mechanic’s Liens (in some states)Government liens such as state and federal tax liens, city or county liens, US Government liens.IRS liens (IRS may buy the property within 120 days after sale at the price paid at foreclosure sale)Code Enforcement Liens, Environmental Liens, and Utility LiensChild Support Liens"Is this the right approach for bank-owned?

It is a lot more risk than I am comfortable with; yes there are incentives but that does not mitigate the risk sufficiently in my opinion. 

Is the tracking of all business expenses sufficient? 

In my market the cost of a general contractor willing to play ball with 203k is such that BRRRR will not work since you will not have sufficient equity after financing the cost of said general contractor. 

If they are only 4 months in arrears they would only need $2,879.12 to bring current. 6 months of seasoning might not be sufficient; you may need at least 12.