Kohler before setting up a business entity.7 Buy lots of insurance and then add a Commercial Liability Umbrella.

In regards to negotiating with the HOA that should be a No, I would assume if he owes $8k in back dues there's most likely a lien on the property if the HOA is doing there job correctly to insure they get paid.

If my math is correct,1250 revenue(333) mortgage interest(630) depreciation---------------------------287 <--- what you're calling taxable incomeWhere is the insurance expense, the property taxes, management fees, repairs/maintenance, advertising, etc? 

Reserves are the amount of principal, interest, taxes, and insurance, plus any HOA that are needed.  

Call the servicing Utility to get an average on the property.Once you get a property under contract you will be digging deeper during the due diligence.Holding costs include (but not limited to) loan payments, insurance, taxes, utilities, HOA fees, etc., that occurs during the Rehab period and up until the property is fully rented.  

I will be making all payments, insurance, upkeep, etc. from there

Umbrella insurance 

I’m an auto-pay, no BS tenant myself. 

No life insurance, minimal workman's comp.

It's possible that they mean that they don't want to carry owner financing, but you should clarify that.Be sure that you buy owner's title insurance too.