The option contract defines a "consideration" (money) paid to owner for the buyer's right to purchase per the terms of all the 9 items in the link I provided, including #7, the length of option time period. 

Cheap properties can work well if sec 8 them and take care of accounting for the large cap/ex item costs.

Essentially they are saying I knew a lot more then I disclosed and they are unhappy about it.The city had a standard point of sale repair list naming more then 90 items when we purchased the property.

Then, once you have carried that for a certain time period other 'regular' insurers will take you back.  

Have done most due diligence items, but I'm stuck on two pieces that I'm not sure about.1.

You will need them to establish damage claims against the tenant's security deposit when they move out to avoid the "It was always like that...." claim.These items are what quickly come to mind.

You may have a grasp on this aspect, but there are items to consider that can play a big factor when choosing your land such as topography, existing zoning & platted lot status, minimum/maximum requirements such as parking, detention, size of building, setbacks.  

then looked at a recent appraisal and the pool was a -$10k line item in the appraisal. 

My $10k example was admittedly unrealistic.However, by way of further background, @Dustin Heiner wrote an excellent article on this topic on his website masterpassiveincome.com titled "What to Do When A Buyer Backs Out From An Assignment Of Contract".In it he suggests a scenario where the assignee decides not to proceed, perhaps after discovering a big ticket repair item that would cost significantly more than the portion of the assignment fee held in escrow. 

In addition to appreciation potential, there are a bunch of tax benefits to consider as well... my favorite being that a tax loss can be carried forward to offset future taxable income.