Just some food for thought.

Then after the inspection he goes over the report and revises the estimate based on any new information that comes available or big ticket items that may have shown up.

For example I've looked up items like that using the census bureau data. 

Got some numbers from a hard money lender who had me itemize and budget me reno.

I know personally quite few Sec.8 Tenants who drive nice cars (Lexus, Jeep Wrangler), take vacations, enjoy shopping in high end malls......they work for cash and have free health care, food stamps and Sec.8 Housing.These are not legal reasons but that's not what I believe I should do.

And while they DO happen, smaller items are far more common and those should be easily handled if you have the systems and team in place.

My plan is to chip away at these items as needed, keeping about 20k reserves for this in the next 5 years. 

The appraisal will uncover if any items need addressed prior to meeting property conditions per agency guidelines (FHA or Conv).

A few items of note...

Maintenance and large capex items can often get overlooked when investors focus on monthly payment.