@Jonathan West At this point I would imagine they are asking for the inspection report to try and get details surrounding the reasons you gave for backing out.  

I am currently using a spreadsheet, which is ok for regular payments but it gets problematic with late payments, NSF, extra principle, etc.Has anyone found software that is beneficial to DYI lenders?

Basically got every single fine detail of the house both good and bad never seen an inspection company as through as them and they charge like 300/350.

Zip Codes - the best data for zip codes comes from the US Census http://www.census.gov/quickfacts/table  There you can enter a zip code to get a very detailed picture of who lives there, how much money they make etc...Again once you have that data I would do a lot of Google research to see what is happening there.

The details will be up to you and your borrower.

I had a real estate broker license for about 30 years but I never did that full time.Always remember to do the math analysis on your prospects and try to look at them before you make an offer or at least have a clause in the sales contract that allows you the time (usually about 15 days) to make a detailed inspection of the subject property and possibly back out of the deal without a penalty that will excessively hurt you.There is so much to say to you but I am bound to forget something.  

Check out NUREIA.org - if you sign up for the emails, you'll get all the details on when and where.

This is why we are willing to pay a few hundred bucks extra per listing, vs. using an MLS service. 

My goal is to invest a property that can cover all my mortgage payment and hopefully some extra income.

Further, there is an overlap of time, which I can't remember all the details, but to some degree as long as the tax payer has a right to redeem the IRS is still in play.