This seems a little bit padded.

Especially on carpet and padding. 

I've bought 3 in the past year from auction.com, all great deals -- a tear-down house on 4 acres for $17k that I sold for $35k, a SFR for $38k that now gets $850 rent after some rehab, and a doublewide on 1.5 acres for $7500 -- I'm practically giving the doublewide away as a short term capital loss, and renting the land for someone else's doublewide at $250, and adding pads for two more.

4) Given that you are buying the property as is and do not have a chance to see what kind of condition the property is in on the inside, how much to you pad your purchase price to account for that kind of thing?

Try doing a search for rental properties on "hot pads."

DTI is capped at 43% in most cases and adding utilities to the debt pad.

If he has cash in the bank to be able to cash out the underlying note in case the it is called, then I suppose he could play the cat and mouse game. 

Edge of top tiles is biggest issue, I've both had them rounded over by granite shop for $5 each, and used diamond pads in a drill to polish out the square edge.

Owners (when looking to sell) can pad their numbers in easy ways.

Putting a pad in will make the shed last and not rot/fall over forcing you to remove it.