She lived on my property for 3 months while I had to file eviction on the actual tenant and name her as an "unknown occupant" because I didn't know who she was or the other several people she had taking up house there.I have found that the law is not on the side of honest people in most cases.

There's will always be unknowns, but you should roughly be close especially on a rental rehab.

It is not unknown for the attorney to bring the offering to the attention of regulatory authorities at this point.

Thinking, if regular formula we use (0.75*ARV-Rehab costs) is good enough to deal with it, with higher risks/ unknowns involved... should I re-negotiate or back out???

I think this will make it an easier learning curve compared to dealing with the unknowns of strangers as tenants since I cannot vet tenants in person or personally oversee the property since I am out of state. 

There’s definitely a lot of unknowns investing out of state, but I feel the risk is still lower, considering the starting Investment is quite a bit lower.

I've seen so many folks that hesitate before getting in because of the fear of the unknown.  

Old buildings have many unknowns.

I know realtor is pushing for this but in this market that is not necessary and put buyer/investor to higher unknown risk.

And there are some unknowns involved with that.