Some details, 25 year AM, 10 year fixed then converts to 5 year adjustable, 6.91%, and no pre payment penalty. 

They also referred me to a public adjuster at the same time.

Schedule a time to visit the rental and do a walk-through to ensure it is safe (no running water, temp adjusted, trash hauled out, etc.) and secure.

Next Step: Adjust accordingly.

I think I would make excuses or adjust the criterias just to make something work.  

Nobody wants an ARM (adjustable-rate mortgage); yikes - of course not, everyone knows you are at risk of forclosure!

The maximum amount of the energy package that can be added to the borrower’s regular FHA loan amount is the lesser of:· A cost-effective improvements to be made (energy package) based on the home energy assessment; or· the lesser of 5 percent of:the Adjusted Value;115 percent of the median area price of a Single Family dwelling; or150 percent of the national conforming mortgage limit.An FHA-approved lender can access FHA’s EEM Calculator to determine the dollar maximum amount that a borrower can finance for energy improvements.

talk to the dept of health first (records requirements etc), establish what upgrades/maintenance required, line up a reliable repair/handyman/type person, consult lawyer, and then make your offer, see if you can buy the land it's on via lot line adjustment (ideal scenario). a lot to be aware of, such as system upgrades or county code changes bringing in the requirement to add metered connections to an older small system, for just one example.Otherwise- owner doesn't want to manage, I doubt you really do either but could be wrong. 

(Father in-law was an insurance adjuster)

Decide on how you will manage and adjust your P/L estimates accordingly.e.