This property is condemned & is scheduled to be demolished .Incidence 2) After the auction, I went to the tax commissioner office & paid for the winning.

Kind of like when you win $1MM in the lottery, its usually $1MM over 20 years, or $650k or so in a lump sum. 

The investor is my uncle so I'm sure we can work out something that is a win for everyone involved.

. - Perhaps you're right, but I would bet that pushing the heating costs on the tenants will result in a rent decrease that is less than the fuel savings; so you will get a net-positive gain. 

If let's say after a few months or so, after the transaction has closed, then suddenly, the seller had realized that he/she made a wrong decision in selling that home for that price, even though he/she knew it was below market value, and if they try to collect money or the difference by suing the investor/realtor --they may win the case because, she then told me that, the law will be more favorable to the one that didn't know any better, which in this case, it's the seller. 

Tim:Since you're planning on living in the duplex (at least for a year, I would assume), an FHA loan could very well be your best bet.  

Either way it's a win win for all, most homeowners wait to long and reduce there options by waiting.  

Don't go out finding properties with no rhyme or reason and hope to find buyers later.And I would bet if a buyer found a property on MLS he is interested in, he would just buy it. 

Forgive me if you mentioned them before.Also, I wouldn't bet on appreciation.  

Im a buy and hold only kinda guy, and I wont buy anything that i dont have equity on it.The biggest bet you are taking there is that the cash flow will remain the same, and that the market wont turn on you.