My partner does not want to reinvest their portion of the proceeds.

I am insured with great local referencesHave done numerous flips and rehabs. 

JOhn,  title companies are NOT in bed with any agent they are netural.. if they showed favoritism they could be in deep trouble from the insurance commission... you may want to check the contract most of them have a mediation clause for this very reason.if you don't come to a conclusion the title company will file an interpleader with the court and send the money there.. and you guys can duke it out there..

We could build something solid and lasting here, and I'd take my proceeds and invest into buy and holdsI hope to hear how everything turns out with you and your partnership.

Not only will the bank give you a hard time about the knob and tube but you will also have a tough time with Insurance companies. a new 200 amp service will probably run you about $2- 2400, rewiring the house, sheetrock, spackle and paint will probably run you another $4-5000, depending on how much has to be opened up and fixed.

You'd be incredibly lucky to find a place that generates close to $6K/month in rent for that price -- I'd be happy with $4K/month on a $500K property and that would cash flow (after taxes, insurance, maintenance, water, etc) at best $2500/month.

I suppose there "could" be an investigation into the fire damage and any potential insurance claims.  

The financing to be assumed is a HUD-insured 223(f), 35-year fully amortizing loan.

Who is the insurer for the HOA?  

Shouldn't the insurance company pay for this?