It seems that you don't have correct understanding of taxes/entity structure, hire good CPA (there are quite few of them here on BP), would be well worth it!

I would say it sounds like you have a good opportunity if you structure things correctly to replace the income.

I'm leaning toward demolition with intent to replace it with a structure about half that size but don't want to waste materials. 

An overlay of shingles on the roof that I believe to be 10 years old (property was sold 2x in 2009 $53K then $110K) I am assuming all renovations happened then.There were other things that seem minor but these "structural issues" concerned the inspector. 

I'm having trouble calculating ARV because this is NJ and it's not a model development, meaning this home's structure is different than most in the neighborhood. 

Both properties are run-down and have long-term tenants who do whatever they want (unauthorized pets, subletting, building unauthorized structure, smoking, etc).

So I'm looking to hire a structural engineer to assess the foundation and give me me a quote if it needs repair. 

This first posting is to get experienced advice on insurance, advertising, property management, cleaning and handyman services, llc structure etc.Chris

Seller's end up being responsible for your malfeasance so while it may be "off the books", the liability remains to some extent no matter how your purchase and sale agreement is structured with them.You came out guns blazing against my statement, without clarifying your position, until I poked holes in your comparison between your position and that of the OP.

I assume I'd need to find a good lawyer that deals in double closings and shell out some cash for advice.