The septic waste system will need to be connected to city sewer in the spring, which will run about $4200, and the house also needs a couple safety repairs/upgrades, which cost another $1500 roughly. 

Not to mention they are supposed to have deadfall safety catch which obviously did not work or is not present.

Took inspection report sent it to a virtual assistant (I didn’t have time at that time) to break the items in the inspection into a few categories for example Electrical, potential water issues, tenant safety, then cosmetics.

Not only because of the safety, but because the list of available companies that insure knob & tube is tiny and because they are taking on the 1800's technology risk, they are likely going to charge you for it.The upgrade will likely cost a bit but your place will be more marketable and also, all in all, safer.  

@Shion Queen the best is to visit the places you are looking at if you walk down the street and fear for your safety you don't want to invest there, think of your area, there are probably locations you wouldn't want to invest, these agents are thinking like that and trying to give you good advice, but without a frame of reference you feel like you aren't getting a full picture.

Let them deal with your property manager exclusively, otherwise you will receive calls in the middle of the night about repairs, clogged toilets, etc.Never give your tenant your home address or home phone number for your safety.

Ok, so playing devils advocate (I've always believed in low LTV for safety), and out of curiosity; If you only lose money when you sell and make when you buy, and I have no plans on selling during the downs of the up and down cycles, and if my cash flow is unaffected / unrelated to market value swings, and I keep more money in reserve should I over leverage and push LTV to say 95% - is this a bad thing?

They've been very slow to respond to things that are not arguably directly health or safety issues, but this house is falling apart.

This will be consideration for investors needing to bring more money to close but if the numbers still work then that added safety should be helpful. 

Once again, don't over leverage just to get a deal done> Finally, I usually tell people to have at LEAST 6 months mortgage in the bank for safety net...1 year is ideal though.