We will be equal partners.

In fact, gross rent (before expenses) aren't usually $2000 on such a property....that would be rent equal to 4% of the purchase price....however, that'd be a screaming deal if the numbers shake out.

Two totally different worlds and purchasing PROPERTY does NOT afford you any right to pull credit on a person(s) that you do not have a contractual relationship with.OP - Um...I wouldn't bid an amount equal to the first and second total debt if the foreclosing entity is the second lien holder.

Hire a public insurance adjuster to negotiate your claim with the insurance company, they will probably be able to get you more than you can personally get from the insurance co. i have not gone through this but this is something that i have read about. you are also better off with replacement cost in your policy, this is equal to what it would cost to fix it vs actual cost, which takes into the account the depreciated value of what was destroyed.

If all things are pretty equal you likely should look to your own stomping grounds where you live for a smaller property like this.If you are worth say 2 million and you are buying 10 doors at 50k for 500k and putting 150k down then if it goes bad you might have a small loss and tax write off to get out.If you are worth 400k and putting down 150k into an area you do not know that well with not enough doors to get passive then the risk does not likely equal the reward upside.

Should we form an LLC together owning equal amounts of the LLC and then have it purchase the property? 

You only start profiting after your cumulative CF has equaled the amount of cash you put in. 

During our initial walk-thru the house, it had a HORRIBLE smell in the kitchen, an equally horrible smell in the family room (pet urine), and we found that the kitchen drawers and cabinets were infested with bugs - we had no idea what they were. 

I've been reviewing a ton of deals in the past few weeks in the Pittsburgh area, and I definitely can appreciate how vital underwriting taxes into the deal can be. 

The agreements also require defendants to advertise any future rental property as "Equal Housing Opportunity" properties, to maintain a record of rental applicants submitted by prospective tenants, and to report all discrimination complaints received to the Attorney General's Office.