It's of course possible that you stumbled onto a "lemon", but the biggest learning I take out of your story is actually something that folks like @Jon Holdman here keep emphasizing (and rightly so): make sure you have enough reserves to weather significant unexpected expenses.  

I went to college and got a business degree that emphasized real estate.  

Again, ask which is used.If I Have an appraiser or BPO (broker’s price opinion) come inside, and I have done a lot of repairs, I show the appraiser each of the items I have replaced, and emphasize the grade.

I have used this strategy 3 times and I’m currently using it on a large home in Gilbert, Arizona where the tenant rents pay all the costs of the home plus the rents pay down about $750 a month in principal pay down.This post emphasizes the importance of having reserves when purchasing a rental property. 

Important to my wife and I, anyway.I couldn't agree more about the nature of the site and how it seems to emphasize much more heavily the successes than the failures. 

@Frank Iglesias,@Alan Taylor is absolutely correct, but I'd like to emphasize his point. 

But you also want a separate agreement where you emphasize that they are co-signing and are liable for rent payments and damages.

Your offer will most likely be well below what they would get in the open market but you're going to emphasize that they won't have to pay realtors commissions, deal with traditional financing contingencies, the home not appraising and deal falling through etc.

It is interesting that Bob emphasized the word never.

I can't emphasize enough how critical it is to find the right attorney.