In addition to public records, have title search co. order a "city/county lien search" which will uncover any unrecorded, pending violations, which will become liens.

What you uncover here will dictate which questions you need to ask next.

If the house has hardwoods, I've seen some talking about uncovering those - although some say not to due to wear and tear. 

A wonderful claim, but it is the details and math that uncover the truth.I don't think he is trying to scam anyone.

They do bi-annual property inspections of units which always uncovers something fairly major i then have to get fixed (ceiling falling down!???).  

The best way to explaining this is for you to download an IRR calculator spreadsheet or build your own simple one and play around with one.For what its worth most deals I deem meeting minimal IRR standards is 13-15% but you have to dig a little deeper to uncover the real placements of cashflows and capitalization events... and then dig even deeper to verify the assumptions such as occupancy, rent increases per year, and what reversion cap rate was used.Again I don't look for IRR cause its manipulated a lot instead I look at total return on a 5 year basis.

However, I normally have my realtor bake in enough time in the contract for due diligence to have inspection done, in an effort to ensure that there are no severe problems masked.In the event a problem is uncovered during due diligence period, or you simply don't like the house for whatever reason now that you have seen its innards, then, you can reject the deal and reclaim your EMD as a result.I have done this on several occasions.Lastly, if the property has tenants this will be good for them as well, so that less people will be walking through their living areas.

Pretty conservative considering the assignee will have 110K in equity after the rehab.You just made 30k without lifting a finger, lining up contractors, arranging financing, not to mention the possibility of uncovering something detrimental to your profits.

Personally, I learned to truly love knocking on doors and tap into my "inner Columbo" and become a good investigator of people's situations to uncover the facts and circumstances and especially the opportunities. 

The book does a good job of explaining the basics, like the renovation/rehab costs being packaged into the mortgage, but there are a few critical parts that are left out of the book that we uncovered through research.