The local government had my contractor create some basic drawings of the work, had me pay the permit fee and pay for an inspection. 

We also pay outside of Turno.

You have the area experience and data to help you, but courthouse steps auctions are blind bidding (other than what you can find through the windows), all cash, 10 percent down at the time of close, and not always clear on all of the liens associated with the house (tax liens, HOA liens, utility liens, etc.). 

Best to just negotiate price, closing assistance in lieu of repairs, or have seller pay your contractor up front before closing if you know and trust the contractor.

Cashflow is minimal at first, usually enough to pay for the occasional repair and you are paying close to retail price. 

It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees.

But now that you mention it, "do I really need to report it for taxes"?

See what your tax liability is on the money and what you should set away for Uncle Sam. 

If the home sells for 1.2, that puts him below the 500k capital gains tax exclusion so he walks away with a nice profit and no tax.

He is not the cheapest but you get what you pay for.