You have bills to pay, it's sad that they have issues but it's not your concern and your bank damn sure doesn't care. 

The agent is willing to work with me and offered to pay our agent a referral fee but that they would need to be in the deal someway since it was their opportunity - which I honestly understand and would not try to snatch from them.I was concerned with the pros and cons with either route - direct or through an agent.

Are there concerns like location, zoning or land use, or is it simply about passing the inspection if it's a residential use?

All very unlikely.Also, I'd be highly concerned about that 18% vacancy rate you'd be buying into!

I am concerned about theft during and after renovation so a policy that can cover that would be of utmost importance. 

Lots of money to attorneys, lots of time lost and you still have a house that needs fixing.One word of caution, be careful of who you take advise from concerning the HVAC and drainage issues.

Some concerns I have been thinking about:1.

Concerns & Risk Mitigation:- What are the biggest risks you look for?

One of my friends is also thinking about that but what I am concerning is how about the vacancy rate for the STR and MTR? 

My biggest concern other than the closing costs was that if an FHA buyer tried to come buy it my understanding is they would need to wait 90 days from when I bought it and I think it would only take about a month to fix it up.