MLS, it had been on the market longer than normal so I asked them to bring the price down.

Option 1 is normal closing time but a low price - low enough to compensate you for the extra 5-6 months of delay.

But if your neighborhood has lots of garage conversions, then that would lead me to believe you don't need that garage and that it's normal practice to convert the garage.  

Take him through a normal 20 year Stock market cycle of ups and downs. 

I am claiming that these were normal wear and tear and potentially from tenants before- which would not have been detected during move in.

I have read other posts but they all seem to be 1-3+ years old and I know things change, is this something that is normal or should I walk away.

You normally give great advice, but I need to disagree with you on not reporting rental income.

Treat it like normal.

Transfer taxes / stamp taxes are normally added to the cost basis of building / land.

The tenants that you get, offset what you would normally pay, so it's a great set-up with less risk than having 2 mortgages to pay for if you lived in a home and rented out a 2nd home when you start this REI journey.In Gilroy, you will get appreciation, and you should be able to rent out rooms at a good price point.