The home needs a lot of work, including lead paint removal, some asbestos removal (don't know of the extent yet but I'm planning for the worst), new roof, new siding, rewiring, and an interior gut and reno (kitchens, bathrooms, etc).

Depending on the type of loan (conventional versus FHA), they have very specific requirements for the condition of the property - from the age of the roof to the condition of the paint. 

The roof, master shower, and carpets throughout need replaced, and although the property is structurally in good shape and the AC\HEAT is in good condition, the house has never been updated to today's modern look.I want to walk away with 40,000 in cash but I am afraid that after the projected closing costs of $13000 that include the realtors $9600 commission I wont get the $40,000 because it needs a roof, shower, and carpet.   

This was a big project requiring new electrical new plumbing bathroom addition new roof Windows, everything.

GC: Scott Tovin from Ross Brothers Construction Roofer:  German Duarte from Florida Quality Roofing Mold / Restoration: Johnny Mackey from All Dry USAYou can find all of them on google, but if not, feel free to contact me.  

Upon closing, insurance said it needed a new roof or they wouldn't insure it - damn, $2200 spent right off the bat!  

I've never bought a house before, and i've never had an income to be able to be picky about my living situation, so i really have no idea what amenities to look for, and even worse, no idea what large ticket items to look for. obviously roof, foundation, electrical, plumbing - but what indicators of those can i actually inspect on my own and be able to see if this house has any major red flags? 

Those are just 'very, very rough guidelines', I'd say my last 3-5 flips average out to about $13-14 per sq ft - Kitchen, bathrooms, flooring, paint inside and out, one or two of the major systems (roof, windows, furnace, water heater), etc.  

Since then the back side of the roof had collapsed into the property.

Sometimes plumbing replace and new roofs.