As far as the mismanagement goes - the section 8 property does look somewhat rundown and unkempt but I think the main issue is that the residents are just kinda hanging out on the lawn and steps smoking cigarettes and drinking.

It sounds like smokes and mirrors to me.Be interested to know where the location is and what they claim this area to be?

The rest of the house was intact, but had immense smoke damage.

Just a few weeks ago they declinrd to pay a smoking damage claim because (though we had all documentation in place) our cleaning companies invoice did not include a phone number.

@Rob Bergeron i've been looking at houses in smoke town that would be total gut jobs down to the studs.

Even with a few gnarly evictions of crazy inherited tenants under my belt the worst I’ve had was old furniture left, dog turds and cigarette butts on the carpet and human turds un-flushed in the toilet (no upper-deckers yet thankfully).

If we bought it we'd have equity in the property and would be able to use that in the future.My question is should I go through with this purchase or pop smoke and bail?

Had to rewire & replace all the old 2 wire outlets (no ground) & install a new panel & run all new circuits, GFI's, the dreaded AFCI's & hard-wired interconnected smoke/CO detectors to code.

And if they are smokers who smoke inside, then, no way. 

I haven't measured the windows to see if they fulfill the 'room' requirements, but if I fulfilled all the other reqs by adding a wall mounted HVAC system and a smoke detector, could it appraise as an extra bedroom along with the unit?