I am doing my best to accommodate and fix the insulation as well as see if there are programs in place to lower the cost. however i want to be firm with tenant as they are not compliant with paying rent because of the cost of the utilities.

Attorneys  dont cost, they pay. 

The forms are online, and it costs $100 per filing. 

This will be costly in today's market and interest rates, but might be worth a shot if they can afford to stay.If they don't want to stay and you want the the townhome to rent to someone else and just want to assume the loan, well then she can call the lender and see if the loan is assumable. 

.- Expected renovation costs $1MM.

Imagine making millions of dollars over the course of your career and then having to pay 30-50% every year to uncle sam instead of compounding that cash over time.This is exactly what real estate professionals have learned to mitigate.To reduce their taxable income, they just buy a building every year, do a cost seg, and use depreciation to reduce their tax liability dramatically.Their personal wealth snowball grows much larger and much faster than their W2 counterparts who give most of their money back to the government each year.Following this strategy as a real estate professional is one of best ways to end up with a much larger net worth at the end of your career.

It is a small town, definitely a tertiary market right now, but that is where opportunity is going to be found.I think LTR, in the right location, can provide enough revenue annually to cover all holding and leverage costs while the resident pays down the principle and the demand in the city sustains slow and steady appreciation. 

But, these broad market studies are so large, they are almost meaningless, in the real world.Between glut of new supply in many "hot" markets coming online, a continually softening economic outlook, inflation over last couple years making day to day items feel cost prohibitive, many average renters are strapped and seeking lower cost housing.  

Take their ARVs and cost of rehab with a grain of salt.

Here are a few to watch out for:Property Condition: Most distressed properties need extensive repairs or renovations, which add to your initial investment.Competitive Market: With Phoenix's popularity among investors, competition for the best deals can be intense.Complex Deals: Foreclosures, auctions, or short sales are much more complicated compared to regular real estate transactions and usually require specialized knowledge.Tips to Successfully Navigate the MarketDo Your Research: Understand the local market conditions, including neighborhood trends, property values, and potential rental income.Build a Strong Network: Work with professionals who specialize in distressed properties-such as brokers, contractors, and legal experts-to make the best decisions.Assess Costs Carefully: Factor in the cost of repairs, holding costs, and any potential financing issues when evaluating a property’s profitability.Be Patient: Finding the right distressed property takes time.