Plumbing, electrical and HVAC all need completely replaced...this part we had a good idea of, but the excess costs including the mold are escalating beyond what we budgeted for since this is a 3,000 sf house.  

And any excess start up costs over 5k (or any costs that don't get deducted due to phase out) are also amortized.

However, you probably will not go bankrupt from a purchase like this, assuming you have excess cash to cover unforseen large capex expenses like a roof replacement, etc.

In my novice opinion, this is what needs to be done to the house:Mold inspection/eradication (water damage from leaking water heater in attic)HVAC neglect (possible mold)10 Fogged Windows (house has numerous large beautiful windows that have become opaque due to moisture)Pressure wash exteriorReplace Carpets (approximately 1500-2000 sq ft)Paint interior walls/sand and paint trimPlumbing hardware has all been removed/needs to be replacedPool filled with excessive amounts of leaves/debris (pump is running)Excessive amounts of trash throughout house yard and pool houseLive Oak growing onto roof (arborist needed)New Sod (currently all weeds)Pool Deck ResurfacingGarage Door Openers have been removedLarge golf ball sized chip on bottom of granite on islandresurface built-insExterminatorPatch holes/cracks in walls (about 10 fist sized holes)Many light fixtures missing (10 or so in closets and bathrooms)smoke alarms missingSo, part of me was disgusted and felt very guilty watching my buddy conduct a walk through via the internet.  

There is mold in the property which the bank will not rectify prior to close but it isn't that excessive and something I can handle removal of with a professional cleaning up for a reasonable cost immediately after closing.

Due to the excess interest and the value coming in a little low, she has to bring in $4100.00.

I told her to check with the next door property owner but I told her excessive wind is likely an "act of God" and it would be unlikely that they would cover it.

Problems with 401k1) Excessive fees2) Major losses3) Taxes and penaltiesSecondly, he will have access to use the funds at any time unlike the 401k.

After you 1031 you'll have the remaining depreciation from the $100K and start new depreciation clocks on the excess basis of $300K over the unadjusted basis of the original property. 

FOCUS on getting the vacant property taken care of so that you have some money coming in.And yes, that money is too expensive. 20points and 9% interest is a little excessive.