They day after we gutted them we bought 96 sheets of rock, 50lb of screws, insulation, mud, tape, doors, casing and base.  

If you want stable rents with little upside it could work out but if the market turns then the slower job growth area could turn into an undesirable area. 

Just as a penny stock can be delisted and become unmarketable and virtually worthless, your $50K duplex can become unmarketable, uninsurable, in-underwritable and completely undesirable. 

I am fairly new to investing but I'mnot just throwing mud and hoping it sticks.

That said, if all you follow is the numbers you will end up with junk properties in undesirable areas.

The sellers fear is if the home were to have severe damage and the insurance would cover the damage and replace roof and kitchen then they would be locked into a undesirable contract and now the home is worth more.

Either you aren't doing many deals or you are acquiring property in a very undesirable area (country, desert, swamp land). 

Not that I agree with such laws, they're often meant to keep out "undesirables" who are unable to rent a whole house, like minorities and young people. 

I think every LL needs a legal means to get rid of "undesired" tenants without the effort/bad feelings of terminating a lease or worse an eviction.We use month to month lease and have never terminated a month to month lease for any reason other than missed payment. 

(Mud and finish the side areas of the wall.)