The catch is it must be vacant 90 days and winters in Vermont are expensive to heat the building so the pipes don't freeze requiring costly plumbing repairs.So this property may be eligible for up to $130k in grant money and rental income guaranteed by the state!

And then when a pipe bursts, I can get a 2nd on the house from Billy Bob's ira for 5k(fix the 3k pipe and still have 2k in the ira for other issues).

I know it seems counter intuitive.. 

Dated mica kitchen counters and older color style tyles in baths.

Property is in okay condition but has some leaking pipes in basement and needs  a water line for the 2nd unit to have better water pressure.

The roof is terrible and there are leaking pipes.

I was unaware the washing machine did not have a drain pipe.

I would not invest if the good guys are losing ground, but that would run counter to your description that it is an appreciating area.It looks fine to invest in for the information you shared if the long term forecast for the area is safe and stable to improving.

I think I will replace the counter sink with a vanity with sink, get rid of the medicine cabinet/mirror, with a more modern mirror, get rid of the shower pan, and replace it with something else (suggestions?)

The insurance problem grows as we keep having more disasters (hurricane, flood, fire, pipe leak claims in the billions).