(life estate = they own it now, it become yours when they die) The problem with this is they may move out and the house deteriorates before it becomes yours. 

I personally say lever up, but have some nice hedges (aka reserves) in place in case rents deteriorate. 

., If rent decreases by 15% in your area, and you have enough padding in your cash flow to finance the rent deterioration, then in theory, you should be able to weather the storm.But if you're in crazy market like PHX or Vegas, then getting wiped out is certainly possible.

When you reach the point of filing for eviction, you can expect that acrimony will develop, so thinking some sort of agreement can work it out is just not the best line of thought; things will deteriorate and so it is just best for all parties to move on.One of the valuable things about BP is to offer the readers a practical education - so thanks to Rick Bassett for presenting that bit of wisdom so that I could highlight it for those not paying attention as closely ...

The entire underside of the 4" cast iron was deteriorated. 

Ok Bryan Tomko,I am going to give you the best advice I can to help you win this deal without overspending for it.First things first,you need to establish the exact condition of the property,the approximate after repair value,and the true current value of the property.You do this by having professional contractors do a full inspection of the property and estimate every possible repair and upgrades you need to get the property into full ARV condition.This is a 60 year old property in what I imagine is a harsh winter environment.Snow,ice,possible rodent and insect infestations,can and will deteriorate the property over time.I am going to assume a few things now.The roof probably hasn't been replaced in a long time,if ever,it will need replacing.The wiring probably needs repairs and/or replacement.The plumbing needs a inspection with a camera through every pipe to determine damage and replacement if needed.Especially the sewer pipes and main water lines bringing water to and sewage from the home to the city pipes.They are exposed more to the elements and can break over time.I'm guessing the kitchen and bathrooms have never been upgraded and replaced,they will need that completely.New drywall and repainting inside and out.All the costs of doing that work need to be put into your offer by deducting them from the after repair value which you will establish by getting comps from recently sold properties in that area.Once you have all that,you will now be able to sit down with your family and discuss this like a business transaction.No sentimental garbage,just business.You can hug it out with them when the contract is signed.You can use the fact that they are losing 700 per month in insurance as a reason to accept this deal immediately.Now make no mistake,they are going to be upset that the house isn't worth what they hoped it was at this moment.Don't argue with them!!!!

Is the neighborhood improving or deteriorating?  

It was a fix and flip when I bought it and the only work I've done on the property was landscaping; no remodeling has happened since I've owned it and nothing in the house is "falling apart" or deteriorating.  

The property is in the historic district and has deteriorated over the years.  

You will also want to make sure you look at the mechanicals (electrical, plumbing, roof) to make sure that they are up to code and not going to need replacement, plus check to see how deteriorated the parking lot and any retaining walls or garages/additional structures are.