What is my responsibility, if any, in this, or how should I proceed.  

Can I legally proceed with eviction (successfully) even though I have last month rent paid. 

$25K is not enough, in my opinion, to insure a solid reserve fund.

Purchase price: $125,000 (assuming offer is accepted)Down payment: $25,000 (20%)Financing: 30 yr @ 5% = $540 /moInitial rehab: $5,000Closing cost: $2,0001st yr Insurance: $1440Taxes: $120 /moInsurance: $120 /moVacancy: $150 /mo (8%)Maint/Cap-Ex: $270 /mo (15%)TOTAL EXPENSES: $1200Rent: $450 /unitTOTAL INCOME: $1800Cashflow: $600 /moCash on Cash: 21.5%Here is a link to the listing if it may provide more insight:Quadplex ListingThe unit is located on a decent street in a very small town (<10,000).

I would additionally have enough to cover 6 months of mortgage payments (including tax and insurance).   

Additionally since insurance costs are born by all policy holders is it fare to allow any person to qualify for insurance when the likely hood is that their home will be repeatedly damaged or destroyed in the future.

Also I was able to get homeowners insurance to cover the outside of my section of the building in case something happens. 

But I keep hearing people telling me not to rent out a property with a swimming pool because of insurance/liability issues.If I intend to insure it fully, am I still gonna run into problems?

You are correct about the lowball offer which is why I told her to list it on FSBO and  Craigslist and didn't proceed to try negotiations.

It would basically say all net proceeds over 300k would go to the son in law.