Key things to keep in mind with your numbers are:Rent should be > PITI (principal, interest, taxes, & insurance) + maintenance + vacancy + capex + property management fee. 

Insurance wrote a check for much lower than what contractors were bidding for restoration/remodeling. 

Principal, interest, taxes and insurance. 280k with 20% down at 7% = about $1500 a month for PI.

If you have any questions regarding the real estate purchase (negotiation) process, the loans you might be qualified for (low downpayment or low interest rate options), or the insurance you may need for the purchase I can answer any of your questions.

If the law office is in on it, then it would be fraud as well and possibly insurance fraud if they turn it over to their E&O insurance because E&O insurance is for mistakes not for intentional acts.

Regarding this insurance issue, I would certainly try to get new insurance without making any repairs. 

I received a notice from my rental property insurance carrier that they will not renew my insurance policy covering my rental unit.

But the facility is obsolete so that no self pay patient or insured patient would live there.  

I double "co-hosters" in most markets are getting 25-30%.If property management interests you I would suggest you become a licensed and insured PM company to increase your credibility. 

Get the Certificate of Insurance for the electrical contractor in case there is an issue during installation and also thereafter.