Don, thanks for taking the time to reach out and respond to my post. 

Feel free to reach out! 

Once you have a good understanding of what you can afford, reach out to your landlord in a friendly and casual way.

My question is do I go forward with purchasing the property and deal with the higher insurance and potential hazard or is it smarter to walk away?

Even if the rental has a decent cash flow with additional flood insurance, we're still not sure we want to take on that risk as we are out-of-state investors (planning to move back to KY in the future, but not now) and we don't like that it will potentially bring down the perceived value when we try to sell it in the future.The seller has never lived there and has not provided any information on if it has flooded before or not. 

Or if you wanted to sell a rental to make the $200k from selling- you'd have to pay capital gains, and unrecaptured depreciation tax and potentially depreciation recapture. 

@Omar Fernandez - you can start by reaching out to some attorneys, NYC is an attorney city so you'll have to get an attorney involved (who usually orders the title search). 

@Jerry Velezif a property is owned outright with no mortgages, debts or liens on it, then it can (potentially) be purchased on seller financing. 

Reach out!

I have seen this same house that is vacant (all the classic signs) I have located the owner ( I have not reached out to her yet).