I was born and raised there, so I am very familiar with flood and wind damage from hurricanes.

.- increase in vacancy to 30%, 40%, 50% (this could be a combination of bad luck: one unit water damaged, one unit tenant trashed, and you have to evict two more - on a 10 unit portfolio that would be tough, even though only temporary)- lower rents (for whatever reason, what happens if rents go down 10% or 20%?)

I see some good info about down payments being bigger, buyer damages the house then defaults, etc.. 

Some damage from WDI, which seller will have to address this before close.Seller is paying all closing costs, survey & title, they did a rate buy down to 5.49%, and a year warranty. 

Houses that sustained fire events have long term consequences including structural damage and mold that results from water intrusion required to extinguish the fire.

Although sounds like some major damage has already been done.. having been in the note business ( private notes) I would personally never hire a servicer we handle all our own collections and servicing..

They're still trying to scam people wouldn't that help to keep the damage to a minimum?

To me the biggest issue with out of state investing and long term rentals is that you have to deal with property damages and/or evictions. 

Often times when a builder/buyer moves too fast, or is too busy and overlooks a key piece of due diligence, the unethical ones will try the "scorched earth" method and blame everyone but themselves, even when they know it was their own mistake, and they'll see if they can scare you, the seller, the title company et al into paying damages/fixing their problem. 

Long term I think you end up losing your shirt here, so if you can get out without too much damage I'd take my lumps and move on.