Because  my credit it just average 640,  and my debt to income ratio is high.  

I'm currently working a 10-year plan for retirement, at which point I would like to relocate (to the Outer Banks, N.C.) and allow one of my sons to take over the mortgage payments on my residence (financed at 3% thanks to a loan mod from several years ago).Credit is okay but not great.

There are all things banks look at when lending aside from the objective (i.e. credit score, collateral, etc).

Does failure destroy your reputation and your credit?

A benefit of a USDA loan is that it has lower credit requirements, and it offers 100% financing, but there are income limits. and if you find a house in a USDA eligible area, you're going to seriously limit your market for rent and/or resale due to low population.

Miscellaneous other items (i.e. loose faucets, some outlets not working, sliding back door jammed, etc)The seller offered us a $5k credit, however we think it should be much higher (around 10K).

As for where to start, I would start by reading the BP forums, listen to BP podcast episodes and check out the beginner's guide here: https://www.biggerpockets.com/real-estate-investin...In my opinion, his methodology is helpful to people who have a lot of consumer debt (credit cards, personal loans, etc), but not all that applicable to real estate investors. 

Depending on his credit, the DTI percentage that a lender is willing to accept may vary. 

Once you have that, inform him via text you have the judgment and tell him you're going to be recording it with the county so the judgment will hit his credit  report. 

Do we need a separate credit card for expenses too?