At first sight that it's not, you can fire or stop paying. 

I offered .70 cents to the dollar sight unseen.

I would love to have another investor or several so I can pull the trigger on these properties faster and not lose out on them.

If you decide to back out of the deal, you will lose that money, but if a home inspection reveals a bigger issue than what you are willing to tackle, you will get that money back.

If the current owner is losing money each month, he'll surely be more open to an easy solution.It certainly sounds like this place is being mismanaged.

So I had this crazy idea that we could renovate the house putting in a 2 bedroom/2 bath apartment and also remodeling the carriage house on the property into a rental unit, and we could probably sell it and not lose money or at least have an income property were we could rent out the 3 units and we could move and my son could rent one of the units while managing the other 2. 

Why spend money and lose money when you don’t have to?

In case my offer is accepted and there is a counter offer in court and that gets accepted, do I lose my deposit?

@Roderick SimsWhat kind of Prop 13 rights are you worried about losing? 

Once a tenant falls behind in rent ultimately you will be forced to evict and will lose money.